Common Title Problems: What You Need to Know
You might already know that a property's title can vulnerable to a variety of different issues-- each which could impact the ability of a future owner to truly 'own' the property and use it as they wish. In this article, we'll review some of the most common problems-- and how title insurance may be able to help protect you against them.
Public Record Errors, Forgeries
When it comes to a property's title, even the smallest error could lead to big problems down the line. However, it's not only unintentional errors that can cause serious issues; in some cases, individuals will forge documents, making it appear that they have the rights to a property when they really do not. In other cases, an owner of a property may forge a co-owners signature in order to sell the property without their permission.
Unknown Liens Can Become an Expensive Problem
A lien, a security interest against a property taken out by a lender or contractor, can stay with a property through multiple owners, affecting the marketability of the property's title. Some of the most common kinds of liens include:
Bank liens: Liens taken out by a bank, usually due to a mortgage on the property, a home or commercial property equity loan/commercial equity line of credit.
Mechanic's liens: Liens taken out by an unpaid contractor or subcontractor that did work on a property.
UCC liens: Liens taken out by banks, contractors, or creditors on business property, which can include real estate.
HOA liens: Liens taken out by a homeowner's association (HOA) to pay for unpaid dues or fees.
Boundary and Survey Disputes, Zoning Issues
Boundary issues can be a big problem when it comes to a property's title. While you may think you're purchasing a certain amount of property, your neighbors may think otherwise. and if they have the legal records to prove you wrong, you could be in for an unpleasant surprise. In addition, zoning problems can seriously affect your ability to do what you want with your property-- especially if you want to build or expand a home or a commercial property.
Missing Heirs, Undiscovered Wills
After a property owner dies, their property typically goes to their heirs-- but those heirs may not all be known at the time of their death. Plus, the original owner may have a will that has not correctly been filed-- and that could mean the property actually belongs to their heirs in that will--- which may not necessarily be the ones trying to sell the property.
Encumbrances and Easements
An encumbrance is any interest or legal issue involving property that does not prevent the property sale (and the passing of a title to someone else), but could reduce the property's usefulness. One major example of an encumbrance is an easement, which can allow people who are not the owner of a property to use it in a specific way. Another example is a real covenant, which is a restriction that prevents a property owner from doing something specific with their property, such as building structures past a certain height.