Your dream house is within reach. You’ve negotiated your way through tons of legalese, you’ve sat through months of work, and closing the deal is but a few days away.
Then you realize that someone forged the title lease. Your dream house slips out of your grasp. All that work and money wasted.
There are a ton of title lease problems on everything from houses to cars like this one that will creep up on you if you’re not careful. But what are these problems, and how can you avoid them?
We’ve got the answers. We’re here to tell you about the most common problems that lurk behind a defective title and how to resolve those issues! But enough talk.
Let’s do this thing!
Defective Title Problems? Check If Its Human Error
One frequent problem that pops up a lot with defective titles is an error occurring in the public record. These aren’t malicious, rather a careless mistake made by whoever wrote or filed the title. We see human error everywhere, even in multi-million dollar movies and medical procedures.
But if you don’t catch the error fast, you lose recognition as the legal owner of your property. This will put a kibosh on everything, from future attempts to sell the property to having solid legal ground to keep that property should any issues arise.
So how do you avoid this? For starters, call your title officer (or whoever was responsible for filing the title) and double-check that the title made it to the filing office. If you detect that a mistake occurred, give your title company or real estate attorney a ring and let them know what happened.
For additional backup, try reaching out to your loan originator, as they have a vested interest in you not losing that title (it reflects poorly on them otherwise). After that, there’s not much you can do. This will enable the people who can, however, to start fixing the problem with efficiency.
Another problem that pops up with defective titles is a forgery. If the deed or title you get was a fake, you don’t own that property as far as the government says, even if you had no idea it was a fake.
You can’t stop people from doing shady criminal stuff like that, but you can take steps to protect yourself. Buying title insurance ahead of time will protect you from any financial liabilities incurred by unforeseen problems that appear with the title. Hiring certified people to look over your title before you purchase it will also help to save you a forgery headache down the road.
A close cousin of the forged title is the illegal title, usually made when individuals not recognized by the law (i.e, minors, people who lied about their marital status, people not of sound mind when the deed came to pass) made the deeds to the property. Fortunately, the same methods you use to protect yourself in the event of forgeries will work here as well.
It’s Getting Sitcom-Style up in Here
Yes, as ridiculous as it sounds, it’s common for people who inherited a title to either realize a third party not involved in the negotiation has a claim to it, or that the original owner did some “last will” shenanigans and now long-lost family comes zooming up to get their fair share. Hell, even long-lost heirs to the property could pop up at your front door one day demanding you return their birthright (though they won’t phrase it like that because this isn’t Lord of the Rings).
So before your house (or car) turns into a reboot of The Brady Bunch, get a title check performed ahead of time (similar to what you would do to avoid forgeries). The people who check the title research to see if there are any “hidden” owners of the property before you buy, so you don’t get a surprise visit from Grandpa George and his wacky clan a couple of months later.
If you’re willing to negotiate, you could also persuade the third party to give up their claim for some sum or stipulation.
So You Owe the Bank $500,000
It won’t likely be that severe, but the truth is that sometimes the previous owner of a property will rack up a whole bunch of debt on that property, then flee when the bank comes calling. Once you step into that property, the bank holds you responsible for paying off whatever the first owner owed them.
Getting a title investigation company to identify these debts before you get the property, however, saves you a massive bill in the future. You shouldn’t have to pay because some guy didn’t get the financial help he needed. And hey, if you need financial help with purchasing a property, don’t be shy to find out more about how you can get that help.
Neighbors: Can’t Live With Them, Can’t Live Without Them
The tale of two neighbors fighting over property lines is a tale as old as time. But if you’re not careful, you’ll be the next star in the telling of that tale.
In some cases, chunks of the property you are attempting to purchase are your neighbor’s, sometimes without even their knowledge. But if they do a survey of the property and the document comes up stating they’ve got half your yard to themselves, you’ve got a problem.
So take the initiative. Hire someone to do the survey first to weed out any potential problems before they start.
Who Ordered the Easement Surprise?
An easement refers to the ability of other people or agencies to use your property legally. We’ve talked about what happens when it’s one or two people, but what if a whole government agency or utility company runs through?
Well, negotiations don’t do jack here, nor will title insurance (at least if the easement existed openly ahead of time). If you don’t do a check, you’re up the creek.
Let’s Survey Some Property
Amazing! Now that you know the common problems that crop up with a defective title and how to avoid said problems, you’re in the clear for purchasing your new dream property!
For more tips on how to stay ahead in this ever-changing world, check out some of the other posts on our blog! So get out there and buy that house! Don’t put plastic flamingos in the yard though (can you say tacky?).