3 Issues that May Turn Up During a Title Search

March 20, 2019

If your real estate purchase fell through because of an unexpected title issue that prevented closing from taking place, you may feel rightfully frustrated, disappointed, and even deceived. After all, it’s not easy to find a property that fits your personal needs and it may seem overwhelming if you have to go through that process all over again. Discouraging though it may be, however, buying property with an undiscovered title issue can lead to even more serious consequences. These issues may have a negative effect on the value of the property and turn out to be disastrous to your finances.

Thankfully, there is a proven way to avoid unexpected title issues that will help you both facilitate the closing and avoid serious legal disputes after the purchase is finalized. These two goals can be achieved by having a skilled attorney perform a title search on a property you’re interested in. In this article, we highlight some of the most common issues that arise during a title search.

Issue 1: Undiscovered Encumbrances

One of the most common issues that a title search may reveal is related to unknown liens and encumbrances. Both of these terms refer to third-party claims against a property. A lien is a financial claim; having a lien on a property means that it is indebted to a creditor who may have a right to seize the property and sell it in order to settle the debt. An encumbrance, on the other hand, is a much broader term that can relate to any claim or restriction that a property is subject to that can negatively affect its market value. For example, if modifications to the property are restricted by zoning laws or environmental regulations, it is usually seen as an encumbrance.

Issue 2: Mechanic’s Liens

A mechanic’s lien is a financial claim on a property filed by a contractor or a subcontractor that hasn’t been properly reimbursed for the work on the construction project related to the property. While technically one of the examples of the issue discussed above, mechanic’s liens merit an individual explanation for at least two reasons. First, a mechanic’s lien can affect a completely new property. Second, mechanic’s liens are common, especially in real estate markets that experience fast growth due to increased demand. Therefore, even if you’re buying a recently built house, skipping a title search can still get you in trouble.

Issue 3: Public Record Errors

Seemingly simple mistakes with the ownership documents – for example, related to the size of the property or its exact boundaries – can lead to ownership claims from third parties or to money lost in taxes that are unnecessarily high. By discovering public record errors before finalizing the purchase, you can make sure that such issues will be addressed and amended by the property’s previous owners rather than yourself.

You Can Trust Us with Your Title Search

Schlegel Livingston, LLC is a law firm focused on unique needs of homebuyers. That’s why our attorneys will gladly perform a title search on a property you’re interested in. If you want to make a success out of your purchase and protect yourself from the issues discussed in this article, you can count on our thoroughness, discretion, and expertise. Contact us today to schedule a consultation and talk to your real estate needs with one of our attorneys.