It’s a common assumption by new homeowners that they are outrightly the official owners as soon as the signing of documents is concluded. This is far from the truth. Regrettably, the legal rights that they possess as the real estate title holders could be at risk during certain situations. These are some of the defects that are usually experienced when it comes to titles. For your protection against future or hidden problems, title insurance as well as services such as Release Tracking can come in handy.
A title defect can be described as any possible threat to the full rights possessed by a property owner. This also applies to the claims involved during the sale of a property. Another party may potentially have a claim to the property due to an existing mortgage, judgment or a matter that has been recorded in the public domain such as a lien.
The right of possession of the property is ordinarily held by the titleholder. Nonetheless, limitations may ensue when it comes to this right. For instance, this may transpire when a required utility bill or property tax is defaulted by the titleholder. A lien will be placed on the property once the titleholder fails to pay up the money owed. This is effected by the governing authority to recover the money.
The lender who gives out a mortgage to a homebuyer usually has a lien on the buyer’s property. In the event the borrower is unable to meet the loan conditions, the lender may proceed to foreclose on the borrower. Title insurance is necessary for the protection of their property interests. Any defects present on the property will surface once a title search is done. Property taxes will have to be paid when it comes to many lenders. Lenders require that borrowers pay these taxes as escrow payments to them. This shields them from losing lien to entities such as the county tax collector.
Any defects that surfaced during the title search will have to be cleared during the selling of the property. This has to be done by the property owner. The sale proceeds ordinarily satisfy the mortgage.
A title defect is also known as a “cloud”. Resolutions have to be found to these defects before a property sale is made. Here are some of these title defects:
• Illegal deeds
• Public record errors
• Mechanic’s liens
• Delinquent taxes
• Child support’s liens
• Unknown easements
• Past-due spousal support’s liens
• Other unknown liens
• Undiscovered wills
• Missing heirs
• False impersonation of a previous owner
• Undiscovered encumbrances
• Survey or boundary disputes