What Are Common Title Issues?

Legal Compliance Resource
August 13, 2012 — 1,133 views  

A title legally establishes proof of property ownership, but issues could arise if there are errors in how attorneys and loan officers handle this document. Understanding problems relating to the property, such as missing wills, is critical to avoid these issues.

"Title issues present themselves when one attempts to sell a property or to secure a loan using property as collateral," Jacqueline McQuigg, a legal professional with the Law Firm of Salas & McQuigg in Las Vegas, Nevada, told NuWire Investor.

Take a look at some of the common terms associated with titles and some of the best possible resolutions.

Title exams

The title examination refers to a review of all of the public records relating to a property a client might be purchasing. An examiner will check out the past deeds, trusts and wills from the property to make sure the title has been passed correctly to each new owner. Additionally, the title exam allows the examiner to confirm that all past judgments, mortgages and liens have been paid in full.

While everything might come back without any problems, a defective title is an issue that sometimes arises. This term refers to a title to a real property that is considered invalid because a prior holder did not have it or failed to provide an accurate description of the property. Encouraging a client to research the chain of title is an excellent way to avoid this problem.

Title deeds

Title deeds give a person the right to ownership of a property. They are necessary to pass title from one party to the next, and offer a proper description of the land that must be delivered to the purchaser.

However, common issues such as missing parcels and ownership interests could hinder your client's ability to buy a property. For instance, a title could be missing a parcel of land due to a subdivision of the property, so you'll need to be able to establish a chain of title so the deed can be altered if necessary.

Tax titles and short sales

If your client buys a property at a tax sale, he or she will receive a tax title. This type of title could be acquired if the previous property owner was delinquent on payments for a property, and gives the purchaser immediate possession.

Short sales offer people the opportunity to buy homes directly from banks. Typically, a property owner enters into an agreement with a mortgage lender that is less than what they owe. In doing so, the bank turns no profit, but avoids the problems of having to foreclose on a property.

With properties purchased through tax and short sales, buyers should examine every aspect of the agreement before obtaining a property. Doing so could prove valuable, allowing them to save resources and time. 

Legal Compliance Resource