What could possibly go wrong?
Well, quite frankly – a lot. There are numerous title problems that can arise when closing on a home. By securing title insurance, you are taking the first step to cover yourself in the event of a title mishap.
Go into the closing stage of home buying armed with everything you need to know about escrow so you can feel safe and prepared for unfortunate circumstances.
But first, if you are still wondering exactly “what is a title in real estate?”, let us clarify that for you.
What is a Title in Real Estate?
A title is a legal way of holding ownership over real estate. It dictates the details surrounding rights to a certain property. Titles are also used in reference to automobile ownership.
There are different ways you can own a title on your home, for example, as a single individual, a married couple, or joint tenancy.
Who Handles Title Transfer?
An escrow company normally handles the title and deed transfer during a home sale. Before transferring the documents, the seller is required to pay for a title search, proving that they are the rightful owner(s) of the property and have no outstanding claims.
Title Search Errors Might Occur
Beware: Not all title searches are made equal, and sometimes title problems arise that even the seller didn’t know about.
Issues with your title can put you at risk for losing your home, be it before the deal is finalized or years down the road, which is why bother buyers and sellers acquire title insurance.
Now that you understand the purpose of a title, it’s key you understand what can go wrong.
12 Surprisingly Common Title Problems
Here are the top 12 most common title problems that happen way more often than you think.
1. Property Comes with a Lien
Surprise! Talk about a value pack. You get a mortgage with a bonus bill for former owner debt.
Not the deal you were hoping for? We didn’t think so.
If previous owners had outstanding debt, there is potential for the bank to put a lien on the property even if it now belongs to you.
With distressed properties, this becomes a more acute worry as it is more likely that the owners abandoned both bills and homecare.
2. Encroachments With Neighbors
Encroachments may draw you closer to your neighbor than you might like.
Encroachments are places where the neighbor’s land and your land overlap. This introduces a situation where the property lines are not clearly drawn and you are now stuck sorting out whose land is whose.
3. Public Record Errors
Public record errors can cause financial strain on a title owner.
Everybody makes mistakes, but that doesn’t mean you want to be paying hard cash for the mistakes of others.
The financial strain introduced due to clerical errors can be devastating. Public record errors come about as filing errors, negligence, or incomplete documentation.
4. Long Lost Family Members Appear
Not expecting to meet the family so soon?
We’re talking heirs.
At time of death, if the owner’s rightful heirs are nowhere to be found, the property may be sold. However, if those heirs come asking where their property is and you’re the inhabitant, problems will surface.
5. Previous Owners’ Bankruptcy
If an owner of the house (even in the case where there are multiple) files for bankruptcy, it can cause a ripple effect that touches all those involved. There will most often need to petition the court and have the home released for sale. Otherwise, the closing process will be stalled.
6. Illegal Past Deeds
Old, shady deeds can come back to bite you in your assets.
A deed from years ago can mess up your current position as the homeowner, endangering your current title over the property. In the past, if someone had an illegal deed it could actually affect prior and present owners.
These illegal deeds come about when deeds were made by minors, people lying about their marital status, and illegal immigrants.
7. Undiscovered Encumbrances
You’ve bought a home and settled into your space. Everything is going swell when a third party shows up to inform you that they, too, are property owners.
Your property is about to get a lot more crowded.
Title checks can uncover other owners attached to your land. This will help you avoid unexpected roommates.
8. Unknown Easement
An easement will not result in a financial crisis but it will certainly make your experience as a homeowner strained. An unknown easement could give rights to other parties to use your land. Or it could prohibit you from using your land in the way you planned.
9. Title Forgeries
Title forgeries can endanger your homeownership.
If documents pertaining to your homeownership have been forged, it could come back to endanger your status as a homeowner.
Forged and fabricated documents are not myths and unfortunately do happen. By securing title insurance and including professionals in the title search you can take the measures necessary to protect yourself from the ramifications of forgeries.
10. Undiscovered Will
The deceased prior owner’s will has come to light, requesting that the home goes to an heir. That puts you and your title endanger. The worst part is, this could happen years after purchase when the thought of losing your home is a distant worry.
11. Survey Reveals Problems with Property Boundaries
When your survey and your neighbor’s survey come into conflict, property boundary issues will come to the forefront.
This could result in shared ownership of the conflicting property. However, having a professional escrow agent on hand will decrease the possibility of these problems affecting your status as an owner as they will take all the actions necessary to properly assess the legal documents involved.
12. False Impersonations
This takes ‘fake it till you make it’ to an entirely new level. As indicated by previous points, people aren’t always as honest as they say they are.
A common or similar name could be used by the seller to impersonate the true owner of the home. This can cause your title to the property to fall through and become void. Talk about a scam.
Is Your Escrow Company Looking Out for You?
Approaching homeownership with a ‘That will never happen to me’ attitude can put you in a financially painful position given a dose of bad luck.
Escrow isn’t a simple process. Neither is examining a property title. That’s why professionals are involved to help along the way to closing on a deal. Escrow agents will help explain the escrow process and handle the transference of funds to obtain your title and take official legal ownership of your new property.
Protect your investment and your future happiness with a California escrow company you can trust.