An important step of any real estate transaction is securing title insurance. The process requires attention to detail, from a title commitment to when you purchase a policy. Title insurance is detrimental to protect your investment, but can occur beforehand. Title issues can derail a sale or purchase. There are common title issues to be aware of before you sign.
Prior owners may have not paid all their bills. Unpaid debt could lead to banks or other companies placing liens – a legal notice – on your property. This is a common scenario with foreclosed properties. Even though you are not the cause of the debt, once you purchase the property, their problem is now yours.
Errors and omissions
Clerical or filing errors can negatively affect your deed and ownership rights. Common errors include misspelled names, omission of legal requirements of a deed, or simple misfiling. Small mistakes can result in serious consequences, like loss of ownership. Undoing these issues can result in further financial investment.
A forged real estate document is hard to identify at first. While a majority of property transactions are done with honesty, fraudulent documents are present within public records. By this point, rightful ownership of your property might be up in the air.
Surveys are done to determine boundary lines before a purchase. But even an updated survey does not always accurately reflect property boundaries. A long-time neighbor might pull out an older deed with certain legal descriptions, which can fuel a dispute.
Title issues happen regardless of precautious measures. Title defects are not always preventable. Occasionally, problems with property do not surface until after the deal is closed. Owner’s policy of an insurance often covers these issues, but not all.
You want your investment to grow. Hidden legal costs from a title challenge make that harder. Before you sign, it is important to look for any signs of possible issues.