Before you invest in any kind of real estate, you’ll want to make sure that the title to the property is defect-free. A defect is anything that could affect the ability of the property to be fully and legally transferred to the new owner. They’re also called “clouds” on the title.
While sellers have an obligation to be upfront about any known encumbrances tied to a property, there are all kinds of title problems that can crop up without their knowledge – especially when a property has a lengthy ownership chain.
What are some common title defects?
Simple errors in the public records surrounding a property comprise a lot of title defects – but even something as apparently trivial as a misspelled name or a typo can create major issues down the road. Mistakes in the property’s legal description – such as a mistake in the description of the property’s size or distance from nearby survey markers – can throw into question what’s legally part of the property. It can take a rather expensive land survey to ultimately get things corrected.
Another common issue is incorrect names. For example, one document in the property’s history may refer to an owner as “James Smith,” their legal name, while another refers to them by the nickname of “Jim Smith.” While the documents may refer to the same person, the difference is a title defect that can cause confusion about ownership.
Finally, missing signatures are another common problem. Sometimes spouses of property owners weren’t asked to sign a deed when the property was sold in the past, or an heir may have neglected to sign the right documents when a property passed through probate. This can lead to surprise ownership claims if they aren’t resolved.
Property title defects are much more common than most people realize, but they can often be resolved fairly easily with experienced legal guidance. It may take little more than a simple affidavit or a properly filed correction to the deed. When that fails, however, there are other options, including quiet title actions, that can eventually put things to right and allow the property sale to proceed.