What are Title Defects? Why Should I care?
In the realm of real estate transactions, the term "title defects" might sound alarming—and for good reason. A title defect can derail the process of buying, selling, or refinancing a property. Knowing what common title defects are and why they matter is crucial for anyone involved in real estate. This blog post will explore some of the most common types of title defects and explain why you should care about them.
Errors in Public Records
Mistakes happen, and sometimes they occur in public records. Clerical or filing errors could affect the deed or survey of your property, putting your claim to the property at risk.
Unknown Liens
Previous owners might have left unpaid debts that led to a lien on the property. Until that lien is cleared, the title cannot be transferred effectively.
Illegal Deeds
Suppose the previous property owner was a minor, undocumented immigrant, or someone who reported as single but was actually married. These scenarios could affect the enforceability of the prior deed, affecting your ownership of the property.
Missing Heirs
Sometimes, heirs go missing or are unknown at the time of a property owner's death. When they come forward, it can complicate your ownership rights.
Forgeries
From time to time, forged documents that affect property ownership are filed within public records, obscuring the rightful ownership of the property.
Undiscovered Encumbrances
An encumbrance is a claim by a third party on a property. This could be in the form of an easement, which could restrict how you use your property.
Unknown Easements
You may own your new home and its surrounding land, but an unknown easement may prohibit you from using it as you’d like and could allow government agencies, businesses, or other parties to access your property.
Boundary and Survey Disputes
You may think you know where your property lines are, but what if your neighbor disagrees? Discrepancies in boundary and property lines can affect your ability to build on or even sell your property.
Why Should I Care?
Financial Risk
Title defects put you at risk of financial loss and could even result in losing your property. If someone else has a valid legal claim against your property, your investment is at risk.
Legal Complications
Even if you could eventually win in court, the legal process is expensive and time-consuming. With a defective title, you're opening yourself up to potential legal battles.
Transaction Delays
If you’re looking to sell or refinance your property, a title defect can cause significant delays. Resolving these issues can take time, affecting your plans and potentially leading to lost opportunities.
Mortgage Hurdles
Most lenders will not finance a purchase without clear title. If a title defect is discovered, it can derail your mortgage application process, forcing you to either resolve the defect or find another property.
Title defects are not to be taken lightly. They can throw a wrench into your plans, costing you time, money, and peace of mind. Knowing what they are and how they can affect you is the first step in protecting your property and your investment. Title insurance serves as an effective safety net, offering financial protection against these and other potential defects in a title.
For personalized consultation and services related to title defects and title insurance, feel free to reach out to our team of experts. We adhere to Michigan State Law, Federal Law, and best practices in the real estate and title insurance industries to offer you comprehensive solutions.