Resolving Real Estate Title Problems

Legal Compliance Resource
February 10, 2014 — 1,200 views  

Facing real estate title issues that arise during a sale is not a new occurrence for attorneys. In fact, it is an investment strategy employed by many people to purchase properties which are available at a discount rate and sell them for a profit after it is resolved. Either way, you need to know how to go about resolving the title insurance issues of your client.

Title Issues

Typically, clouded title problems could revolve around any of these:

  • Local, state or federal tax liens
  • Property work related liens
  • Claims on property with missing heirs
  • Boundary and survey issues
  • Ownership claim issues

Resolving Real Estate Title Issues

Resolving title insurance issues cannot be done purely by negotiation. Although your client may ask you if he/she is entitled to step out of the transaction, there isn't a straightforward answer to it. If the transaction has already been closed, it has to be resolved based on the court's decision on the claim that the contract has been breached.

Before closing, you can try applying under the vendors and purchasers legislation, to the court. This proceeding is typically used when one party is not happy with the title issue requisition, or if the party finds the response to it unsatisfactory. The issues normally come into light after the lawyer has examined the performed title search, which may be related to easements, encroachments, or violations of the Planning Act and such. More often than not it isn't used as much, but its obvious advantages make it a good option considering which it should be employed more often.

You need to be aware of application procedural issues that can impact the transaction outcomes. Here are some procedural issues you need to know of while applying to the court:

  • Issue for an application in a jurisdiction that is in the same place as the property.
  • The hearing date can be an important consideration, as it tends to be time sensitive. The available hearing dates can be nearly six weeks away, in which case you could try coaxing the judge to advance the hearing date, if possible.
  • The jurisdiction authority is held only by judges at the hearing.
  • If a pending court application has caused the closing date to not be extended, resolve the issue before closing, otherwise make sure both parties agree to the extension.
  • These applications don't usually have contested factual issues.
  • The jurisdiction's decision is limited, and in the rare case that a third part steps into the dispute, say in case the boundary interferes with their land or such, they cannot be bound or added to the jurisdiction's decision.

The court decides on whether the requisition at hand is sufficient or not. If dispute comes to the fore after closing, you can register for a copy on the court's order and examine it. In case the requisition response seems insufficient, the party can either seek out for a another answer or a different solution under pursuant to general contact principle or agreement of purchase and sale principle.

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