Common Title Problems

Securing a policy of title insurance is an important and necessary step for real estate transactions.  Whether you are buying or selling it is important to know what interests may affect the property which could affect your ability to convey good title or use the property in the way you intend.  A comprehensive title search will describe who owns the property, what liens may exist, or describe claims of third-parties, or title defects described by the recorded record at the county register of deeds.

In this blog, we’ll explore common title problems that can arise during the property purchase process.

Boundary and Survey Disputes:

• Disputes as to the location of a boundary line or an improvement upon the property, or conflicting surveys may lead to disputes between neighbors. Knowledge of these issues must be disclosed by a seller and will likely have to be resolved before a transaction can close.

Errors in Public Records:

• Clerical, typographical, or filing errors can cause confusion as to the ownership of real property. While this type of error may be easily resolved, it is possible that it won’t be possible to resolve it quickly which could imperil a transaction.

Unknown Liens:

• When creditors want to secure repayment of a loan or other financial obligation a consensual or non-consensual lien can be recorded into the public record. If the lien is legitimate and current, such as the seller’s mortgage, then it can be easily addressed at closing. If the lien is questionable or very old, then litigation may be necessary to remove it from title which can be expensive and take a long time.

Rogue Deeds:

• Occasionally a deed appears in the chain of title that purports to convey title to a new owner, but the grantor did not own the property. While these situations could be resolved with the cooperation of the person receiving “title” in this manner, if that co-operation is not forthcoming then a lawsuit may be necessary to remove them from title.

Deceased owner:

• When an individual dies with real estate titled in their name, as opposed to a trust, then a probate estate must be opened to grant a personal representative the authority to act with regard to the decedent’s estate and the assets that are a part of that estate. While getting authority to sell real estate may not be difficult or time-consuming, it could be and if purchase agreements are signed before court authority is granted, then there is potential civil liability for the seller.

Forgeries:

• Forged documents, like rogue deeds, filed in public records may be a criminal act and can cloud property title. These documents typically can only be removed through quiet title litigation that will take months to resolve.

Encumbrances:

• Building and use restrictions, rights of first refusal, land contracts, options to purchase, rights of reverter and other documents that claim to demonstrate an interest in real estate or a limitation on the ability to convey the real estate may appear in title; buyers may not accept title while these matters are unresolved.

Easements:

• Easements are a recognized legal right and partial ownership interest in real estate that typically grant access to others (e.g. the right to access another piece of property by driving across the encumbered parcel). Depending upon the scope and location of the easement, a buyer might consider them a title defect.