Many title issues are commonly assumed to result from fraud or recording mistakes, but in reality, they often arise as one of the complexities of major life events. Divorce, the death of a property owner, and estate-planning decisions can all impact ownership rights and create unforeseen complications during a real estate transaction.

A title company’s role is to verify legal ownership and identify matters that may affect a property’s marketability. When ownership changes due to family or estate circumstances, additional documentation and legal review may be required. Understanding these situations can help REALTORS®, lenders, attorneys, and homeowners identify potential issues early and avoid closing delays. Below are several common situations that can create title complications, along with steps that may help keep the transaction on track and lead to a smoother closing process.

Divorce settlements and transfer of ownership

When a married couple buys a home together in Illinois, typically they file for “joint tenancy” or equal ownership of the property. A divorce settlement often awards property to one spouse, but the divorce decree itself does not automatically update property records. An additional deed may be required after the divorce is finalized to officially transfer full property ownership.

Things like unfinished refinancing obligations, outstanding liens and judgments, or other joint debts and financial obligations can also leave both parties connected to a property. When the property is eventually sold or refinanced, these issues may surface, potentially requiring the involvement of a former spouse or additional documentation to clear title and complete the transaction.

To avoid these issues, always review all divorce-related documents early in the transaction process. Identifying title issues, ownership interests, and unresolved obligations before closing can help avoid delays and ensure a smoother real estate transaction.

Death of an owner and probate issues

In addition to the emotional complexity of property transfer following the death of a loved one, these cases can also be legally complex. Joint tenancy may allow ownership to pass automatically to surviving owners, while tenancy in common may require a deceased owner’s interest to pass through their estate. In the case that assets are solely in the name of the deceased, these assets are typically frozen and must go through probate. Probate is a court-supervised process that validates ownership and authorizes the transfer of assets.

Probate-related challenges may include:

• Court proceedings that take months to complete.
• Delays in obtaining necessary documents.
• The need to appoint an executor or administrator before a sale can proceed.

Missing heirs and family disputes

Estate matters can become even more complicated when multiple heirs are involved. Common issues include multiple family members holding ownership interests, difficulty locating heirs or beneficiaries, and disputes among family members regarding the property or proceeds from a sale.

For example, imagine a case where a seller believes they inherited a parent’s home after their passing and lists the property for sale. During title review, it is discovered that multiple siblings also inherited ownership interests. Before closing can occur, all ownership interests must be properly addressed and documented.

Estate-related transactions often benefit from early title review and close coordination with legal counsel. Identifying ownership issues upfront can prevent significant delays later in the transaction.

Trust-owned properties and common title issues

As estate planning has become more common, many homeowners have transferred their real estate into revocable living trusts. Trusts are frequently used to manage assets during a person’s lifetime and facilitate property transfers after death. However, title companies must verify that the trust and trustee have proper authority before a property can be sold. While trusts can simplify estate planning and avoid probate in certain situations, they can also create title issues if records are incomplete or outdated.

Common title issues with trust-owned properties include:

• Improper funding. A trust may have been created as part of an estate plan, but the property was never legally transferred into the trust. In these situations, ownership records do not match the trust documents.
• Trustee authority questions. Title companies must verify that the person signing on behalf of the trust has the legal authority to do so. When a successor trustee is involved, documentation proving their appointment and authority may be required.
• Outdated trust documents. Trusts are often amended over time to reflect changes in trustees, beneficiaries, or estate plans. Missing or outdated amendments can create uncertainty about who has authority to act and who holds an interest in the property.
• Trust name discrepancies. Even minor differences between the trust name listed on the deed and the trust documents can create title concerns. Recording errors, omitted dates, or inconsistent trust names may need to be corrected before the transaction can proceed.

How REALTORS® can help prevent delays

Many ownership issues can be identified early through proactive conversations with sellers, collecting proper documentation, and working with a trusted title company. To help keep transactions on track, it’s important to open titles as early as possible, gather trust and estate documents upfront, encourage sellers to disclose known ownership changes, and involve attorneys when legal guidance is needed.

Divorce, death, and trusts are common life events, but they can significantly complicate property ownership and title insurance. By identifying these situations early and working closely with experienced title professionals, real estate practitioners can help keep transactions on track and avoid costly delays at the closing table. Work with Landtrust Title on your next transaction — we’re your partner for results.