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Uh-Oh, Title Defect: Now What?
By Barbara Pronin
The contracts have been signed, the inspections completed. A smooth transaction seems likely. But every property has a history, and that history may reveal a defect in title – sometimes called a cloud on title – can sometimes threaten to upset the applecart, either on the way toward closing or even some time after the new owners have taken possession.
 
As your title partner, we know this prospect can be daunting, and we strive to keep you and your clients in mind as we search public records to identify and cure – or correct – any defects or clouds on title. As a real estate professional, you know that’s the reason why buyers purchase title insurance – to protect their investment in the event that title problems are discovered.
 
But what, exactly, are some of the most common problems?
  • Clerical or filing errors in the public records 
  • Unknown liens placed on the property in connection with debts of previous owners
  • Questionable deeds, such as deeds executed by a minor, a party in bankruptcy, or a person of unsound mind
  • Missing or unknown heirs, or undiscovered beneficiaries claiming rights in the property, which may turn up years after the transaction has closed
  • Forgeries or falsification of documents that could affect property ownership
  • Unknown easements held by government agencies, utilities or others, which restrict the new owner’s use of the property
  • Boundary disputes, as when a neighbor or someone else claims ownership to a portion of the property 
Some of these title defects can be ‘cured’ or corrected by a skilled title agent early enough for closing to go forward as scheduled, and that’s the most important reason for choosing a reliable title company. Other title defects may not turn up for years after closing, which is one compelling reason for purchasing a title insurance policy.
 
Some buyers may regard title insurance as a pointless or unnecessary expense. As an agent, you know they are likely to think otherwise when they’re ready to resell their property and find that their title insurance policy clears the way for them to do so. 
 
Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice.  You are encouraged to consult your legal, tax or investment professional for specific advice.  The material is meant for general illustration and/or informational purposes only.  Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. 


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