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When people use the term “clear” title, they are talking about legal ownership. During the due diligence period of the home buying process, buyers will likely run a title search on the property they intend to buy. This is their time to correctly identify who owns the property. People either own their homes by themselves (sole ownership) or with other people (tenancy in common). Should a married couple own the house together and one of them passes away, the deceased’s person’s ownership is transferred to the surviving spouse (joint tenancy with rights of survivorship).
Three Issues a Title Search May Uncover
A title search may uncover that there is a lien on the property. If the seller has debts, the creditor may try to obtain payment by placing a lien on the house. There are numerous scenarios in which this could happen. For example, a company that installed a new roof on the home but never got paid could use a lien to force payment.
Though we mentioned inheritances above, some houses may be tied up in legal disputes. Consider an elderly person who owns a home and passes away. Although they left a will behind, the person they left the property to predeceased them. (This is why updating your estate plan throughout your life is essential.) Legal precedents are in place to determine who the home belongs to, but it may not have been concluded. Without a title search, you may buy a home that puts you in the middle of a legal dispute among possible heirs.
Title searches also display encumbrances. These occur when someone else has a claim to a part of your property. If a power company runs lines under your land, they may be able to access them at will.
Resolutions to Common Issues
If the home you intend to buy doesn’t have a clear title, that doesn’t automatically mean the sale is over. When there is a lien on the house, the easiest way to resolve it is to pay the debt. Secondly, some liens do not exist indefinitely. A mechanic’s lien, for example, may only last for a year unless the contractor initiates litigation. If a debt gets paid, your attorney will ensure that the debt has been satisfied and has the documentation to prove it.
You and your attorney can work through each issue as they surface. There may also be instances where it is in your best interest to walk away from the sale. In any case, you should purchase title insurance to protect you against claims of ownership after you have closed on the house.
Drucker & Mattia, PLLC
A real estate attorney is essential when you purchase a home or commercial property. At Drucker & Mattia, we work alongside you to ensure you reach the closing table with confidence. Our role is to protect your interests and investment from the initial offer to the day you move in. For more information about how we can assist you with your next real estate transaction, contact Drucker & Mattia, PLLC, to schedule a free initial consultation.
Drucker & Mattia PLLC
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