We just found out that the house we purchased did not have a clear title. What should we do?

Sun, May 27, 2012

General Legal Issues

We just found out that the house we purchased did not have a clear title.  What should we do?A clear title is required for sale/purchase of all property. Usually this is an easy part of home sales–but sometimes title problems show up before sales that prevent property from being sold. And worst of all, sometimes title problems show up after a sale. The proper way to resolve title issues depends on the specific problem and is best solved by legal professionals.

Most of the time, a clear title is not a problem since a title search is performed during the sale of a home. Anyone—the homeowner, buyer, real estate agents, attorneys—can do a title search since it is done using public records. Some property sales/purchases require more research than others do and many attorneys specialize in this type of work. Searches of these types often find issues such as easements or strange agreements between neighbors or liens–as well as run-of-the-mill types of situations with easy solutions. These types of situations need to be resolved before closing on a home.

Once a title is deemed clear, most lenders require the purchase of insurance to protect them– loan or lender title insurance. Be sure you also purchase an owner’s type of title insurance that protects your interests. The owner’s title insurance is purchased in specific dollar amounts and it lasts until you no longer have an interest in the property. These types of insurance reimburse the buyer and lender with a specific dollar amount and provide legal counsel if a title problem comes up. Make sure you understand what your specific policy is covering as it may exclude certain issues.

SmithLaw has seen title problems relating to unpaid judgments, newly discovered heirs, old liens, fraud, forgery, improper or inadequate legal wording, mistakes in title searching, and more. If you are a homeowner who finds himself or herself in possession of a home with a clouded title—make sure you start with your title insurance company. If you are not in possession of title insurance–contact an attorney who specializes in this area.

Image credit: james.thompson

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