The Common Title Problems Can Snag Your Home Closing

by Apr 21, 2021

In almost all real estate transactions, you must clear up title issues to transfer ownership of the home from the seller to the buyer. This is actually where you will know if the seller has the legal rights to sell the property.

However, the title company has disclosed that over 30% of all title searches uncover some kind of problems such as forgery, undisclosed owners, the previous owner failed to pay local or state taxes and omission in deeds. As a result, they now take their time to exam all records to ensure that nothing is outstanding or defective during the sales process. Even if the problem is a small one, it must be resolved before the sales process must go through.

That said, we will list and explain some of the common title problems that can snag your home closing and how to deal with them. Let’s explore more.

Common Title Problems That Can Affect Your Home Closing

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Liens

One of the most common liens that occur is the Mechanic lien. This is a lien placed on a property by the contractors working on the property. Meanwhile, they do this to ensure that they get paid for their work.

The laws surrounding mechanic liens vary from one state to the other. However, the lien will remain on the title of the property until the contractors file a satisfaction claim. Most of these mechanic liens can be resolved; it’s just that the process takes a lot of time to execute.

Another common type of lien occurs when a divorced spouse doesn’t remove a lien for child support. Even if the debt has been resolved decades ago, and the child inherits his father’s house and decides to sell the property. A lien placed on the property by his mother years ago could still show up and prevent the sale.

In this case, the remedy is that the child will have to get the surviving parent to sign a document called “release of judgment” that states that the debt has been paid in full so as to have a clear title.

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Bankruptcy

If the former owner of the property has filed for bankruptcy, closing the sale of the property could eventually be a difficult process to go through. Another scenario is when the seller bought the property while single and has now got married to someone with a recent bankruptcy. In this case, the title company would need to be sure that not only the spouse signed off on the deed, but that the bankruptcy case had been discharged. If not, it would be necessary to write a petition letter to the court to release the property from the bankruptcy process.
The Common Title Problems Can Snag Your Home Closing

Wrapping Up

A title insurance policy is your best protection against other title problems that may become known to you after you close the transaction. The cost for the policy is a one-time fee, and the policy will be effective for as long as you are the owner of the property.

Meanwhile, in order to purchase title insurance, you will need a complete search conducted by the title company.

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