TEN COMMON TITLE PROBLEMS
Having "marketable title" is another way of saying that a person or persons has rights to a property so that they have the ability to transfer property to a third party free of any issues. But property title and ownership rights are exposed to many variables that impede ones ability to transfer title or receive proper title. It is in these instances that real estate attorneys work in a very complicated area of real estate law, to 'clear' or quiet a title.
Below are 10 common title problems. Then we have included an article by one of the largest title insurance companies that provides a non-exhaustive list of things that can go wrong with a person's title.
1. Errors in public records
To err is human, but when it affects your homeownership rights, those mistakes can be devastating. Clerical or filing errors could affect the deed or survey of your property and cause undo financial strain in order to resolve them.
2. Unknown liens
Prior owners of your property may not have been meticulous bookkeepers — or bill payers. And even though the former debt is not your own, banks or other financing companies can place liens on your property for unpaid debts even after you have closed on the sale. This is an especially worrisome issue with distressed properties.
3. Illegal deeds
While the chain of title on your property may appear perfectly sound, it's possible that a prior deed was made by an undocumented immigrant, a minor, a person of unsound mind, or one who is reported single but in actuality married. These instances may affect the enforceability of prior deeds, affecting prior (and possibly present) ownership.
4. Missing heirs
When a person dies, the ownership of his home may fall to his heirs, or those named within his will. However, those heirs are sometimes missing or unknown at the time of death. Other times, family members may contest the will for their own property rights. These scenarios — which can happen long after you have purchased the property — could affect your rights to the property.
Unfortunately, we don't live in a completely honest world. Sometimes forged or fabricated documents that affect property ownership are filed within public records, obscuring the rightful ownership of the property. Once these forgeries come to light, your rights to your home may be in jeopardy.
6. Undiscovered encumbrances
When it comes to owning a home, three can be a crowd. At the time of purchase, you may not know that a third party holds a claim to all or part of your property — due to a former mortgage or lien, or non-financial claims, like restrictions or covenants limiting the use of your property.
7. Unknown easements
You may own your new home and its surrounding land, but an unknown easement may prohibit you from using it as you'd like, or could allow government agencies, businesses, or other parties to access all or portions of your property. While usually non-financial issues, easements can still affect your right to enjoy your property.
8. Boundary/survey disputes
You may have seen several surveys of your property prior to purchasing, however, other surveys may exist that show differing boundaries. Therefore, a neighbor or other party may be able to claim ownership to a portion of your property.
9. Undiscovered will
When a property owner dies with no apparent will or heir, the state may sell his or her assets, including the home. When you purchase such a home, you assume your rights as owner. However, even years later, the deceased owner's will may come to light and your rights to the property may be seriously jeopardized.
10. False impersonation of previous owner
Common and similar names can make it possible to falsely "impersonate" a property owner. If you purchase a home that was once sold by a false owner, you can risk losing your legal claim to the property.
70+ WAYS TO LOSE YOUR PROPERTY
Here is a list of ways you can lose your property in a real estate transaction. This list is not exhaustive. If you aren't careful enough to engage a real estate attorney, then you may be headed to adding to the list.
- Your title insurance policy protects you against potential defects such as
- Forged deeds, mortgages, satisfactions, or releases
- Deed by person who is insane or mentally incompetent
- Deed by minor (may be disavowed)
- Deed from corporation, unauthorized under corporate by-laws or given under falsified corporate resolution
- Deed from partnership, unauthorized under partnership agreement
- Deed from purported trustee, unauthorized under trust agreement
- Deed to or from a "corporation" before incorporation, or after loss of corporate chart
- Deed from a legal nonentity (styled, for example, as a church, charity, or club.
- Deed by person in a foreign country, vulnerable to challenge as incompetent, unauthorized, or defective under foreign laws
- Claims resulting from use of "alias" or fictitious name style by a predecessor in title
- Deed challenged as being given under fraud, undue influence, or duress
- Deed following nonjudicial foreclosure, where required procedure was not followed
- Deed affecting land in judicial proceedings (bankruptcy, receivership, probate, conservatorship, dissolution of marriage) unauthorized by court
- Deed following judicial proceedings subject to appeal or further court order
- Deed following judicial proceedings where all necessary parties were not joined
- Lack of jurisdiction over persons or property in judicial proceedings
- Deed signed by mistake (grantor did not know what was signed)
- Deed executed under falsified power of attorney
- Deed executed under expired power of attorney (death, disability, or insanity of principal)
- Deed apparently valid, but actually delivered after death of grantor or grantee, or without consent of grantor
- Deed affecting property purported to be separate property of grantor, which is in fact community or jointly owned property
- Undisclosed divorce of one who conveys as sole heir of a deceased former spouse
- Deed affecting property of deceased person, not joining all heirs
- Deed following administration of estate of missing person who later reappears
- Conveyance by heir or survivor of a joint estate who murdered the decedent
- Conveyances and proceedings affecting the rights of service member protected by the Service-Members Civil Relief Act
- Conveyance void as in violation of public policy (payment of gambling debt, payment for contract to commit crime, or conveyance made in restraint of trade)
- Deed to land including "wetlands" subject to public trust (vesting title in government to protect public interest in navigation, commerce, fishing, and recreation)
- Deed from government entity, vulnerable to challenge as unauthorized or unlawful
- Ineffective release of prior satisfied mortgage due to acquisition of note by bona-fide purchaser (without notice of satisfaction)
- Ineffective release of prior satisfied mortgage due to bankruptcy of creditor prior to recording of release (avoiding powers in bankruptcy)
- Ineffective release of prior mortgage or lien, as fraudulently obtained by predecessor in title
- Disputed release of prior mortgage or lien, as given under mistake or misunderstanding
- Ineffective subordination agreement causing junior interest to be reinstated to priority
- Deed recorded but not properly indexed so as to be locatable in the land records
- Undisclosed but recorded federal or state tax lien
- Undisclosed but recorded judgment or spousal/child support lien
- Undisclosed but recorded prior mortgage
- Undisclosed but recorded notice of pending lawsuit affecting land
- Undisclosed but recorded environmental lien
- Undisclosed but recorded option, or right of first refusal, to purchase property
- Undisclosed but recorded covenants or restrictions, with (or without) rights of reverter
- Undisclosed but recorded easements (for access, utilities, drainage, airspace, views) benefiting neighboring land
- Undisclosed but recorded boundary, party wall, or setback agreements
- Errors in tax record (mailing tax bill to wrong party resulting in tax sale, or crediting payment to wrong property)
- Erroneous release of tax or assessment liens, which are later reinstated to the tax rolls
- Erroneous reports furnished by tax officials (not binding local government
- Special assessments which become liens upon passage of a law or ordinance, but before recorded notice or commencement of improvements of which assessment is made
- Adverse claim of vendor's lien
- Adverse claim of equitable lien
- Ambiguous covenants or restrictions in ancient documents
- Misinterpretation of wills, deeds, and other instruments
- Discovery of will of supposed intestate individual, after probate
- Discovery of later will after probate of first will
- Erroneous or inadequate legal description
- Deed to land without a right of access to a public street or road
- Deed to land with legal access subject to undisclosed but recorded conditions or restrictions
- Right of access wiped out by foreclosure on neighboring land
- Patent defects in recorded instruments (for example, failure to attach notarial acknowledgment or a legal description)
- Defective acknowledgment due to lack of authority of notary (acknowledgment taken before commission or after expiration of commission)
- Forged notarization or witness acknowledgment
- Deed not properly recorded (wrong county, missing pages or other contents, or without required payment)
- Deed from grantor who is claimed to have acquired title through fraud upon creditors of a prior owner
- And extended coverage may be requested to protect against such additional defects as:
- Deed to a purchaser from one who has previously sold or leased the same land to a third party under an unrecorded contract, where the third party is in possession of the premises
- Claimed prescriptive rights, not of record and not disclosed by survey
- Physical location of easement (underground pipe or sewer line) which does not conform with easement of record
- Deed to land with improvements encroaching upon land of another
- Incorrect survey (misstating location, dimensions, area easements, or improvements upon land)
- "Mechanics' lien" claims (securing payment of contractors and material suppliers for improvements) which may attach without recorded notice
- Federal estate or state inheritance tax liens (may attach without recorded notice)
- Preexisting violation of subdivision mapping laws*
- Preexisting violation of zoning ordinances*
- Preexisting violation of conditions, covenants, and restrictions affecting the land*
...And many more.
Did you want to discover the 79th or the 99th way to lose property? This is why people, whether it is their 1st transaction or their 100th transaction, make the smart choice to use real estate attorneys in their real estate transactions. Real estate is one of the biggest transactions that people engage in, so why would anyone "not in the business" cut corners? The financial and emotional ramifications of poor due diligence, which includes a attorney title review, is far too great. Call David Soble or any other competent real estate attorney to review title work as part of a larger scope of performing proper due diligence
Attributed to First American Title Insurance Company