Every attorney knows that they must do their due diligence whenever engaging in any kind of legal transaction, and rarely is that more important than in real estate. This is because real estate transactions can be exceedingly complicated, and often involve hundreds of thousands, or even millions, of dollars. Unfortunately, though, no amount of due diligence can be enough to cover every potential pitfall, and that can put you and your client at risk.
Due Diligence in Real Estate Transactions
The core of due diligence in any real estate transaction, aside from reading over a client’s real estate contract, is performing a title search on the relevant property. This title search is intended to reveal any potential defects with the property, protecting your client from potential problems and giving you the opportunity to remedy them before the sale goes forward. In theory, this should cover your bases and help to avoid potential sources of litigation later on.
The Shortcomings of Title Searches
Unfortunately, title searches are not perfect. While title searches can dig up all kinds of records related to a property, including liens, mortgages, bankruptcies, foreclosures, and other legal proceedings, it is often what is not recorded that tends to be an issue. When people fail to report changes in title, or when someone makes a mistake about what they find, it can lead to holes in public records that you may not notice until your client is facing the risk of litigation. There can also be issues when people commit fraud or other types of malfeasance, creating otherwise avoidable confusion and contention.
Types of Title Defects
Some of the most common types of title defects that may not be immediately apparent after a title search include:
- Errors on public documents or records
- Undisclosed heirs in previous owners’ wills
- Unresolved liens or debts against the property
- Forged documents, including falsified deeds
- Problems with boundaries or survey results
- Others claiming ownership of the property
- Difficulties arising from divorce edicts
Protecting Yourself Against Title Defects
Unfortunately, no amount of due diligence can protect against every potential type of problem that can arise during a real estate transaction. That is why you should always make sure that your clients are protected by title insurance. By getting insurance for your real estate transaction, you can always make sure your client does not face the legal or financial difficulties that may arise due to unforeseen or unforeseeable title defects.
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.
