Whether you’re working with a buyer, seller or are a title professional yourself, you know that the homebuying transaction — while exciting — can also be stressful. The buyers are eager to move into their new home, while the sellers may anxiously await the sale so they can move on to the next chapter of their life. One way to prevent any hiccups or delays during the transaction is by working with a trusted title company like Landtrust Title.
Title experts can help identify issues well before your closing date, avoiding legal troubles and saving time for you and your clients. While the scope of what a title attorney can identify is much larger than this, below are a few common title issues that can delay closing or put your real estate transaction at risk.
Liens
A lien — a type of legal claim to a debtor’s property or other assets — is the most common issue that comes up in a title search. Liens can also arise from many different situations. A tax lien, for example, is issued by the government in the event of unpaid taxes. A judgment lien is issued by a court if the homeowner loses a lawsuit and owes a debt to an entity like an unpaid contractor or former tenant. An attachment lien indicates an ongoing legal matter like a divorce or bankruptcy proceedings and is used to prevent the owner from selling the property.
These are just a few examples, but regardless of the type of lien, it’s important to note that a lien stays with the property, not the debtor. If a buyer were to purchase a property with an undisclosed lien on it, they would become responsible for that debt. Similarly, some sellers are completely unaware of liens on a property from a previous owner. In some cases, a lien shows up because the bill was paid but the lien was never removed. As long as the seller can show proof of payment, the lien will be resolved.
Clerical Errors
We’re all human, so, understandably, a filing error or other mistake could happen at some point in the life of the property. However, minor and major mistakes could carry over from one sale to another without a proper title search. A title company can identify and correct these mistakes before it’s too late.
Examples of clerical errors include misspelled names, incorrect legal descriptions of the property’s boundaries and location and omitted owners from the chain of title. While seemingly small mistakes, these errors can affect property rights or result in legal claims.
Boundary Discrepancies and Encroachments
If neighboring property owners dispute the boundaries of the home you’re buying, it can create legal complications. An encroachment occurs when a structure from a neighboring property crosses the boundary line. This could include fences, sheds or even parts of a building. Encroachments can lead to disputes with neighbors over property lines, especially if the encroachment wasn’t addressed before the sale.
One way to prevent this is to obtain an updated property survey. The seller should review the survey carefully and address any discrepancies. The seller can also negotiate with the neighboring property owner to resolve the issue. This could involve relocating a structure, updating boundary lines or formalizing an agreement.
Easements
An easement grants someone else the right to use a portion of the property for a specific purpose. Utility companies often hold easements to access power lines or water pipelines on private property. While many easements are standard and cause no significant issues, some can limit how the property is used, such as easements that allow neighbors access to shared driveways or paths. Buyers may hesitate to proceed with the sale if an easement affects their plans for the property.
To prevent delays, ensure all easements are documented and disclosed early in the process. A title company or real estate attorney can help buyers understand the implications of existing easements.
Use a Trusted Title Company to Protect Your Client’s Investment
Think of your title company as an essential partner in the transaction — they’re there to ensure that the title is clean and free of errors and that your sale closes without delays.
Our team at Landtrust Title Services understands that every transaction has both a clerical and an emotional side. We partner with you to keep your deal moving and offer peace of mind to both you and your clients. If you have any questions about title-related issues, contact us today.