How to Identify and Remedy Fatal Title Issues when Closing?

Your Guide to Identifying and Remedying Fatal Title Issues

Have you recently received a file on an impossible-to-close home? There’s no such thing as a home that’s impossible to close, but there may be complex title issues stopping you from meeting the usual deadlines.

What happens when complex title issues keep you from closing? If closing day seems farther and farther away, then you need a title insurance agent to remedy the problem. This isn’t exactly as easy as it sounds. Complex title issues can be a headache and set the closing day back for years while working out the problem. Lawsuits over title issues are the quickest way to lose money, but a title insurance agent that goes above and beyond responds promptly to resolve your issues and avoids litigation situations at all cost.

What are some common types of fatal title issues to avoid?

Double Check the Legal Description of the Property

An incorrect legal description is a fatal title flaw. One of the most common fatal title issues is an incorrect legal description. This usually happens when the description on the property deed or actual physical features do not match what is listed under the property title’s legal description.

A title flaw in the legal description can be remedied by ordering an up-to-date survey on the property and re-recording it correctly. According to 8 Common Title Problems and How to Fix Them, “a valid legal description is one that can be located on the ground by a surveyor. A seemingly defective legal description may be valid, but it may take a survey to prove the validity of the legal description.”

Be Certain All Documents Have Been Recorded

Another common fatal title issue is a document that has not been recorded. If there were any previous mortgages on the home that were paid off, but the documents for the file were not satisfied, closed and recorded as such, then this could pose significant problems in the future. It also means that the previous owner still has a “stake” in the property as an owner or the first mortgage received “priority”. Unreleased mortgages cause issues for title insurance agents and lenders, but these can also be remedied by contacting the bank or financial institution that failed to record the satisfied loan.

Other Miscellaneous Liens and Title Issues

There are plenty of miscellaneous liens that also cause big issues when closing. In the case of Judgement Liens, 8 Common Title Problems and How to Fix Them states, “it can be paid off entirely or you may be able to negotiate a release from the property (the debtor may own other more valuable property, making the judgment holder more likely to release its judgment).”

A Mechanic’s Lien is another type of lien on a property that results from unpaid improvements. If the property owner fails to pay a contractor or supplier, this person is able to file for a mechanic’s lien. Other types of liens include Association Liens and Marital Liens.

Conduct a Deep Title Search to Identify Problems

The reality of title searches is that you are only legally required to investigate a property by going a specified number of years back. But, this is also how you can run into issues when buying and selling property, because the error in a title can sometimes be much farther back in the past. To spot these types of fatal title issues, you will need a title insurance agent who is skilled at conducting deep title searches.

Start working with a title insurance company that goes “above and beyond” customer service.

A title error will cost you. A fatal title flaw, such as a mistake in the legal description of a property happens, and instances are not uncommon. Download our Bay National Title Company’s Fatal Title Flaw/Chase Bank Case Study for Lenders and find out more how a diligent title company quickly resolves complicated situations without a drawn-out lawsuit.

SOURCES:

8 Common Title Problems and How to Fix Them