The real estate agent is not directly responsible for a homebuyers property title search, having a basic understanding of the title process is essential. Access to public records can give you a deeper understanding of the homes you’re marketing and the community you serve. Understanding the problems that may arise as a result of title search will better help you counsel clients and even avoid situations which could derail a home purchase.
A Properties’ History
Your clients purchase title insurance both for peace of mind as well as mitigating potential issues that may surface down the road. Here some of the findings which may arise during a routine real estate transaction:
- Errors in public records: Clerical mistakes happen. Input errors or misfiling can slow approval of title insurance for your client.
- Illegal deeds: The deed is the most important piece of the closing contract for all real estate transfers. If the delivery of the deed, whether through the creation of an escrow account or passed directly from the seller to the buyer, must be notarized in acknowledgment of the sellers intent. Any conditions included by the seller that are unresolved by the closing can prevent the proper transfer of the deed.
- Unknown liens: A previous owner may have failed to make mortgage payments or a contractor may have a lien on the property that was not resolved once payment was received, must be resolved prior to closing. Other liens such as judgment liens resulting from an unpaid creditor, tax liens placed on the property by the IRS, state or local government could even result in foreclosure.
- Missing heirs & undiscovered will: Should a property owner die without an apparent heir, the state will be responsible for selling the owners assets including their home. Should the heir or a will designating an heir surface at some future date, your client’s ownership of the property could come into question.
- False impersonation of previous owner: Common and similar names make it possible to falsely “impersonate” a property owner. If your client purchases a home that was once sold by an erroneous owner, they could risk losing their legal claim to the property.
- Forgeries: Falsified or fabricated documents filed with the local municipality as part of the public record may call ownership of the property into question.
- Undiscovered encumbrances: Former mortgage liens, or non-financial claims, such as restrictions or covenants limiting the use of your client’s property not surfaced at the time of purchase could result in a third party having legitimate claim on the home.
- Unknown assessments – An unknown easement may prohibit your client from using the home and land they’ve purchased as they might. An unknown assessment could also allow government agencies, businesses, or other parties to access all or portions of your client’s property.
- Boundary/survey disputes: Survey disputes resulting from multiple survey documents are not uncommon. This means that a neighbor or other party could claim ownership to a piece of your client’s property.
Simple issues with wording which don’t comply with real estate standards, improper recording of ownership, a failure to include the signature of a spouse necessary to the transaction, even a failure to follow proper recording or filing procedures, can easily result in a title dispute that could put your client’s purchase at risk.