Buying any type of real estate is a big financial commitment. While handling the legal obligations and paperwork, the property title often doesn’t get the attention it deserves. As the owner, the title grants you the authority to use and dispose of your property. If something’s wrong with it, your rights could be challenged or even revoked.
A problem with a title can cause both financial and legal challenges for a long time. Fortunately, these title problems only arise when people are unaware of what to check or how to protect themselves.
Therefore, we will look at five usual issues related to property titles and explain how to avoid them.
Errors in Public Records
Sometimes, you find that official documents maintained by the government include mistakes, for example, spelling names wrongly, changing a few digits in addresses, or missing important elements in legal descriptions.
Little mistakes like this could put your claim to the property in danger and cause expensive legal disputes. Having an error in spelling your name on a deed sheet slows the transfer and could even have another person lay a claim to your property.
How to avoid it: Remember to get a thorough title search done with a licensed title company before buying any real estate. Also, consider purchasing title insurance since it covers you from future problems related to mistakes in the title.
Illegal or Improper Deeds
Even if the deed to a property looks valid, it may have been executed improperly. Somebody might have handed over their property to someone else, who is a minor, mentally unwell or using a signature that was not their own. Issues also arise when records aren’t properly signed and formatted according to the regulations of the place.
These problems may lead the title to be invalid, even though you bought the property with good intentions. In this case, the courts could decide not to accept the deed. If things get serious, you have to move out or make agreements with anyone who claimed the property before you.
How to avoid it: Work with reputable professionals, and always have a real estate attorney review the title and transaction history. The next step is to look at all the old transactions and ensure everything was done legally.
Unknown Liens
Finding out that there are liens against the property that the buyer didn’t know about is a regular title issue. If the previous owner didn’t pay the tax bill and hasn’t settled with a contractor, there could be a lien. They remain even after the title of the property is transferred to different owners.
Since the debts may be hidden and not managed before closing, as the buyer, you could be responsible for paying them. Liens postpone the sale or transfer of property and cause problems with getting a mortgage. Most of the time, they are hidden and only found out when a thorough search is done.
How to avoid it: Make sure that a lien search is carried out during the due diligence phase. Title search companies are skilled at finding out any type of financial liability that may keep you from having complete ownership.
Missing Heirs and Undisclosed Claims
Receiving an inheritance is sometimes a hard process. If a property owner dies with an unclear will, it gets hard to find out their heirs right away. Sometimes, sales go through without all heirs being notified. Later on, someone could suddenly appear and file a legal claim to the property, even if you have lived there for a long time.
Imagine buying a house and then someone could argue that it was left to them in a long-forgotten will. It is possible that you will be taken to court, and as a result, you could either give up your land or pay for expensive lawyers.
How to avoid it: Check the title thoroughly to learn the history of the property and test for any possible inheritance issues. Take the help of professionals to guarantee that all proper claims are taken care of. Furthermore, title insurance will make sure there is no financial burden for heirs who arrive at a later date.
Conclusion
A problem with your property title can negatively influence your finances and even prevent you from using and selling your house. Luckily, these issues often go away when buyers research the title, talk to a lawyer, and buy title insurance to cover their protection.
Whenever you buy property, handle the transaction with care and contact property professionals. If you’re not sure about something, ask, get the proof, and have insurance to protect you.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin