Common title defects to watch for—and what to do about them

Common title defects to watch for—and what to do about them

| Jul 12, 2020 | Real estate |

Title issues can occur in just about any real estate transaction. Although many title issues do not take a lot of effort to resolve, others prove time-consuming and expensive headaches. You can go a long way toward avoiding title defects or resolving them faster if you understand some common defects that you may encounter.

Common title issues: what to know

These are some frequently occurring title defects that could affect your real estate purchase or sale.

  • Mechanic’s liens: Contractors, construction companies or other parties may place a lien to ensure that they recover compensation for their services. To resolve the lien, you must determine whether it is valid, work to get payment to the claimant or file a suit to contest the lien. Once the lien holder releases the lien, the transaction can proceed.
  • Bankruptcy: If a titleholder has filed bankruptcy, it throws a wrench into the sale of the property. Fortunately, the bankruptcy petition prevents any foreclosure actions. However, you will need to petition the bankruptcy court to release the property from the bankruptcy process before you can complete the purchase.
  • Judgments: Some titleholders may have judgments that they owe from a civil lawsuit. The owner must pay the judgment in full. You must obtain a release of lien/judgment before you can clear the title.
  • Forgeries: Forgeries are not as common as the aforementioned title problems, but they do occur. Even if a past owner committed forgery, the current titleholder is responsible for resolving it. You must file an action to void the forged deed.

Even if a title issue is inevitable, it is not necessarily unsolvable. Title issues do not need to derail your transaction. You can work with a skilled title company that can handle the title defects and consult a real estate attorney who can help you understand your options. These parties will help you keep your real estate transaction as smooth and cost-efficient as possible.