Common Title Issues When Purchasing Residential Real Estate

 Posted on October 20, 2023 in Real Estate Law

Every year, more than 80% of Americans opt to purchase owner’s title insurance to protect themselves against any debts and/or liens that might exist against their property. 

Our Stamford real estate attorney would like to inform you of common title issues that may arise when you purchase a home and the benefits of buying an owner’s title insurance policy.

What is a Title Issue?

A title issue, also known as a title “defect,” is a problem with the legal right of ownership of a home. Before a home is sold, a title insurance company will run a title search as part of the closing process. The title search is conducted to find any outstanding liens, debts, or other claims to the property. 

If any title defects are discovered, they must be resolved in order to pass the property title from the seller to the buyer. Once title issues are resolved, you will have a clear title and be able to close on your home.

Common Title Defects

Errors in Public Records

Errors in a property description, misspelled names, or inaccuracy in the form of ownership can impact your interest in the property and may cause difficulty upon resale.

Undischarged Mortgage

A very common issue that comes up in a title examination is an undischarged mortgage. This is often a simple fix since it is usually due to the bank not issuing a discharge or the discharge not being recorded with the town clerk’s office.

Fraud or Forgery

If a previous owner’s signature or identity was falsified, this will “cloud” the property’s title. Once these forgeries are discovered, your rights to the property may be in jeopardy.

Undiscovered Liens 

A lien is another party’s security interest in property put in place to satisfy a debt. Common liens that would affect a property’s title are:

• Mechanic’s Lien: if a contractor claims that the owner still owes them for work performed on the property, the contractor can file a mechanic’s lien to get paid for any services rendered
• Tax Lien: the town can place a lien on the property if there are outstanding property taxes. However, in Connecticut, a tax lien automatically becomes void after fifteen years have passed since the date the taxes were initially due. 
• Judgment Lien: a lien placed on your property. A judgment lien is often the result of a lawsuit. The lien will be satisfied once you sell your home. Even a pre-existing lien that was placed on the home will remain on the property and can become a problem for the new owner.

Undiscovered Will or Missing Heirs

A former owner may die without leaving a will or having any known heirs. If the deceased owned the property alone, the state may sell the decedent’s home and assets. Even years later, a prior owner’s will may be found, and heirs may claim a legal right to your home. 

Unknown Easements

An easement is a legal right a property owner gives to someone else to use or enter their land for a specific purpose. Government agencies, businesses, or your neighbors may have the right to access your land without your knowledge. Although an easement is usually not a financial issue, it may affect your ability to enjoy your property.

Why Should I Buy Owner’s Title Insurance?

Before you buy your new home, you will want to hire the services of an experienced Fairfield County residential real estate attorney to make sure your home is free of any title defects.

Not every title issue will be found and resolved prior to selling the property. Even if an issue comes up years after you buy it, having an owner’s title policy will cover the costs of resolving any issues.

An owner’s title policy provides long-term protection for your ownership of your property while also making the transfer of your property simpler. 

A Stamford, CT, Residential Real Estate Attorney Going the Extra Mile

When you are buying your dream home, you want to rest assured that you have a clear title. When you need personalized and knowledgeable guidance, look no further than our Fairfield County, CT, real estate lawyer at Law Offices of Daniel P. Weiner. Call 203-348-5846 or contact us online to schedule your free consultation.