Closing with Clarity: Understanding Common Title Defects
Title defects are every buyer and seller’s nightmare. Despite the best efforts of previous owners and closing agents, there are several reasons why a title defect can still arise. While some are bigger and more costly to resolve, the headaches and heartaches these unpleasant surprises cause when they are discovered are undeniable. Whether you are buying or selling property, consider working with a knowledgeable real estate attorney to help you spot and resolve issues before closing.
Errors in Public Records
Despite the world turning digital, human error still plays a part in society. When it comes to homeownership, a seemingly small error or oversight can have devastating effects. Clerical or filing errors of recorded documents such as a deed, mortgage, liens, or satisfactions can cause undue financial and emotional strain to resolve.
Unknown or Unpaid Liens or Encumbrances
Most people or institutions placing a lien on a property are diligent about recording the necessary documents. Whether a mortgage or construction lien, the financial claim placed on a property is usually a large enough incentive to follow through on confirming a successful recording. Every once in a while though, the documents do not get recorded and remain unknown or undiscoverable when conducting a title search. Encumbrances such as easements or rights-of-way can be forgotten more easily, since there is typically no financial value. That said, they can still greatly affect how you use and enjoy your property. Regardless of whether the lien or easement is a result of an agreement that you entered into, the implications of such an agreement can have devastating affects on you as the current homeowner. It is important to make sure the outstanding balances of any liens are paid in full, and the lien is properly released or satisfied, otherwise the new owners may find themselves responsible for the outstanding amount!
Incorrect Deeds
Deeds are the vital tool to transfer ownership. An unrecorded or improperly prepared deed can have costly consequences. If a deed goes unrecorded, it is nearly impossible to track down or find through a title search. It may take years before the holder of the deed comes forward to claim the land. If you are the current owner but not the individual who signed the unknown deed, your entire claim to the property could be brought under question. If a deed is improperly prepared or executed, the issue could go undetected for several sales. Correcting the issue may be as easy as tracking down the old owner and having them re-execute a corrected deed, or it could result in costly litigation attorney’s bills.
Properties Requiring Probate
Properties subject to probate are a nightmare for realtors, buyers, and sellers. Sellers often want to dispose of the property as quickly as possible, Realtors often mirror this eagerness, and all parties rarely understand the probate process. This misinformation can lead to improper parties signing contracts or closing documents, individual timelines moving faster than those of the Courts, properties being prematurely listed on the market, and parties unable to fulfil their contractual obligations. Realtors should be conscious of the realities of listing or showing clients a property in probate, and all parties should consider contacting an attorney who handles both real estate and probate, to ensure the process is carried out correctly. For properties in probate, all parties are at the mercy of the courts, and no amount of money can change their timeline or ruling.
Forgeries and Fraud
Fraud and forgeries are on the rise in Florida. Forged deeds and mortgages are one of the biggest concerns when reviewing a title search report. While many counties are imposing regulations and penalties to deter fraudsters, it is not enough. In Brevard County, the most popular scam is forged deeds on vacant land or properties owned by out of state/country owners. Often times the notary and witnesses are in on the scam, making it even trickier to prevent. Fraudsters typically execute a Quit Claim Deed, then quickly turn around and list the property below market value to generate a faster sale. Buyer and Seller impersonation often goes hand-in-hand with this issue, as well as with wire fraud. Whether you are buying or selling property, you should always call the office of the person providing or requesting wire instructions, to verify the information you sent or received is correct. In addition to losing money on a fraudulent transaction, properties sold through seller impersonated deals risk being returned to their rightful owners; this could jeopardize your ownership of the property.
Boundary/Survey Disputes
Surveys are an extremely helpful tool when it comes to identifying property lines, easements, and other important markers. What most people do not understand is that a survey is subjective and only contains information the surveyor can readily obtain. In essence, it is a reflection of the surveyor’s professional opinion. Old surveys or surveys done by two different companies can be very different. These differences can cause issues to arise if they differ from that of a neighbor. Certain issues may be easily resolved, such as a trampoline or above-ground pool that encroaches on the property line, while others can be far more costly, such as a garage, patio or in-ground pool that encroaches on an easement or adjacent property line.
Outstanding Taxes
Similar to lien payoffs, improper or partial payment of taxes can have financial implications for new owners. If taxes are not paid in full and on time, the county may register the property for a tax sale, at which point an outside party has the ability to pay the taxes on your behalf and register an interest in the property. If taxes remain unpaid for a period of 3 years, the county may offer the property at a tax deed sale, where it can be sold at auction, without requiring your consent.
Despite the best efforts of previous owners and closing agents, there are several reasons why a title defect may still arise. Title defects are every buyer and seller’s nightmare, no matter the scale of the problem. Whether you are buying or selling property, working with a knowledgeable real estate attorney can help you spot and resolve issues before closing. Call our office today to find out how the attorneys at Lacey Lyons Rezanka can take the unnecessary stress and uncertainty out of your closing.