3 Ways To Avoid A Title Defect

What is a title defect?  There are so many different things that can result in a defect on title of real estate.  The simplest answer to this question is that it is a claim by someone else that they have some rights or ownership in your real estate.  

Some common examples of things that can create title defects are:

  • An unpaid mortgage.
  • An unpaid tax bill. 
  • An heir or spouse of a seller that did not properly give up his or her interest in the property before the property is sold.  
  • An encroachment on the property by a neighbor.
  • Certain types of judgments against owners of the property.

A good real estate lawyer will not only be able to identify these defects but also help them get resolved so that the property can be sold without any title defects. 

What Are 3 Ways To Avoid A Title Defect?

Hire a good real estate attorney to perform a title search.  

A title search is a search of the public records for any defects or encumbrances in a property’s “chain of title” or ownership history.  This search and the examination of records coming out of the search results, when properly conducted by an experienced attorney, will reveal title defects which can then be addressed and resolved.

Correct potential title defects before closing

Your real estate attorney will identify and propose ways to resolve actual and potential defects on title.  Some title defects are simple fixes and some are more complex and require additional documentation and involve paying off old bills or paying additional legal fees to resolve.  

Rather than ignoring or attempting to wait and see what happens down the road, it is always wise to take the advice of your real estate attorney to correct the potential defects prior to selling or buying the real estate.  The time and cost to resolve things sooner is always better than later.  

Purchase title insurance

While purchasing title insurance is not mandatory, if you are financing the purchase of real estate the lender will require that a buyer purchase two separate title insurance policies, one for the owner, and one for the lender itself.  

Title insurance can be purchased for a relatively very low cost in comparison to the cost off the real estate, and the insurance policy will protect the owner and lender from any future claims for covered issues with the title.

Speak with a real estate closing attorney at WZ Law Group for help determining if you have any defects on title to your real estate and how to resolve them for a smooth closing.