10 Most Common Title Problems
Have you ever wondered why you need title insurance?
Your home may be new to you, but every property has a history. A thorough title search can help uncover any title defects tied to your property and, subject to the terms of the policy, your title insurance provides protection from any title problems that may become known after you close your transaction. Below is a run down of some of the most common title issues.
1. ERRORS IN PUBLIC RECORDS
To err is human, but when it affects your home ownership rights, those mistakes can be costly and devastating. Clerical or filing errors could affect the deed or survey of your property and cause undue financial strain in order to resolve them.
2. UNKOWN LIENS
Prior owners of your property may not have been meticulous bookkeepers - or bill payers. Even though the former debt is not your own, banks, creditors, or other entities can place liens on your property for unpaid debts even after you have closed on the sale. This is an especially worrisome issue with distressed properties or those that were previously subject to foreclosure or short sale.
3. ILLEGAL DEEDS
While the chain of title on your property may appear perfectly sound, it is possible that a prior deed was made by a minor, a person of unsound mind, or one who alleged to be single but was actually married at the time of conveyance. These instances may affect the enforceability of prior deeds, affecting prior and possibly current ownership.
Unfortunately, we do not live in an entirely honest world. Sometimes forged or fabricated documents that affect property ownership are filed in public records, obscuring rightful ownership of a property. Once these forgeries come to light, your rights to your home may be in jeopardy.
5. MISSING HEIRS
When a person dies, the ownership of their home may fall to their heirs, or those named within their will. However, those heirs are sometimes missing or unknown at the time of death. Other times, family members may contest the will to claim their own rights to a property. These scenarios, which can occur long after you have purchased a property, may affect your ownership rights.
6. UNDISCOVERED ENCUMBRANCES
When it comes to homeownership, three is a crowd! At the time of purchase, you may or may not know that a third party holds a claim to all or part of your property. These claims may be due to a former mortgage or lien that was unresolved or non-financial claims, like restrictions or covenants which may limit your use of the property.
7. UNKNOWN EASEMENTS
You may own your new home and its surrounding land, but an unknown easement may prohibit you from using it as you would like. Or, it could allow government agencies, businesses, or other parties to access all or portions of your property. While usually non-financial issues, easements can still affect your right to enjoy your property.
8. BOUNDARY / SURVEY DISPUTES
You may have seen a survey of your property prior to purchasing, however, other surveys may exist showing different boundaries, allowing a neighbor or other party to claim ownership to a portion of your property you thought belonged to you.
9. UNDISCOVERED WILL
When a property owner dies with no apparent will or heir, the state may sell his or her assets, including their home. When you or prior owners purchase such a home, you assume your rights as an owner. However, even years later, the deceased owner's will may come to light and seriously jeopardize your rights to the property.
10. FRAUD / IMPERSONATION
Common and similar names can make it possible to falsely impersonate a property owner. If you purchase a home that was once sold by a false owner, you can be at risk of losing your legal claim to the property.
Play it safe! These and many other issues are generally covered by an owner's title insurance policy. Protecting your interest in what is likely your most costly asset is essential.