Real estate title defects can significantly complicate a transaction. It is often important to address these issues upfront and explore potential resolutions.
In some cases, a title defect will be so significant that the property transfer cannot be completed until it has been rectified. To help you understand how this works, here are three examples of title defects to keep in mind.
1. Inconsistencies between documents
Transferring property involves the use of many different documents, such as a certificate of title and a deed. Ideally, the wording and signatures should be consistent between these documents. If there are significant discrepancies, they can complicate the process of buying or selling that property.
2. Financial issues
In other cases, there can be financial problems that make it difficult to sell the property. Maybe there is an outstanding mortgage and the property owner has fallen behind. Perhaps there is a mechanic’s lien on the property, so it cannot legally be sold until the lien has been addressed. Any financial hold on the property has to be addressed before a sale — or it becomes the responsibility of the new owner.
3. Joint ownership
Finally, there are sometimes title issues when multiple people claim ownership of the same property. Say that two siblings inherited a home from their parents when their parents passed away. If one sibling is trying to sell the property, but the other wants to keep it, it may be impossible for one owner to sell that real estate on their own. Because there are joint owners, everyone has to agree to the transaction, or a court order has to be issued.
If you have run into any of these title issues, be sure you know what legal options you have to help the process go smoothly.