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How Can A Title Defect Cause You Problems?

How Can a Title Defect Cause You Problems?

When people are looking to purchase real estate, they are usually most concerned with issues like the price of the property and whether they will be able to get financing for the transaction. However, one issue they should be much more conscious of is the risk of a title defect. At best, this can cause a delay in your closing, at can cause the entire transaction to be at risk. But what exactly constitutes a title defect, and why are they considered to be such a problem?

    What Are Title Defects?

    A title defect is any issue that complicates the full and unimpeded ownership of a property. These defects often create issues where other people, aside from the owner or owners, have a property interest in the parcel of real estate, or they may bring into question whether the seller of a property is the actual owner in the first place. They may also take the form of a lien or judgment, potentially collectible against the property. Any and all title defects must be addressed for real estate to have clear title, which is necessary for most real estate transactions to go forward.

    What Can Cause a Title to Be Defective?

    There are a number of legal issues that can result in title defects. Some of the most common examples of title defects include:

  • An unpaid mortgage still on the property
  • A lien filed t by a creditor against the property
  • A secured loan that uses the property as collateral
  • Any unpaid property taxes
  • An undisclosed easement or covenant
  • Any claims of adverse possession of the property
  • An unknown or undisclosed heir or claim of ownership by another party.

    How Can You Identify a Potential Title Defect?

    The easiest way to determine if there is any kind of title defect is to conduct a title search with the local clerk’s office and/or other appropriate municipal offices. Title and abstract companies like Habitat Abstract do this on behalf of their customers.  They should have a record of all ownership of a particular property, including any issues that may result in a defective title. This may identify known defects that are disclosed by the seller, and may also identify previously unknown defects that could throw a real estate transaction into chaos.

    How Do You Prevent Harm From a Title Defect?

    Unfortunately, it is not always possible to identify a title defect before a real estate transaction closes.. That is why it is essential to ensure your real estate transaction is protected with title insurance, which can protect you from any risks caused by unknown title defects. If you are conducting a real estate transaction and want to protect against the risk of a defective title, you should contact a title insurer as soon as possible.

    If you are an attorney assisting a client with a real estate transaction, you should contact the title insurers at Habitat Abstract. Our experienced staff will assist you with obtaining a title insurance policy that protects your clients and prevents unforeseen issues related to a defective title. Contact us at 1-888-99-TITLE (1-888-998-4853) or visit our contact page for more information.

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