Clear Title! In real estate, “title” doesn’t refer to a deed or a piece of paper. It’s more than that. It’s your legal right to own, use and sell a property. A clean title is your #1 defense against fraud, old liens from previous owners, boundary disputes and more. So, how do you know you are getting a clear title when you are purchasing a new property? During the closing process, a licensed closer or attorney should uncover all title issues.
Undescovered title issues can delay your closing, or worse, squash your entire deal! The good news is, most problems are preventable. Let’s take a look at the 7 most common title issues and how to avoid them:
Article by: Hayley Baldinelli, J.D.
Table of Contents:
1. Undisclosed Liens
The first of many title issues preventing clear title are old liens from previous owners. Contractors, the IRS, and HOAs can easily put liens on a property. This can easily be combatted by conducting a full lien search. Preferred Settlement Services searches back 50+ years.
Example: An Arlington Park home sale died over a $12,000 unpaid roofer’s lien from 2018.
2. Heirship Surprises (Probate/Estates)
Given Florida’s retiree population, heirship issues can arise quite often. And while trusts and wills should clear up messy inheritance issues, the average Joe doesn’t have either of those things. This will leave inheritance decisions to be made during a lengthy probate process. If you are a real estate agent in Florida, it is important to know the basics of Heirship. Learn more by joining our webinar: Probate, Trusts, Guardianship, and Power of Attorney
Example: A Siesta key heir appeared post-closing claiming a 10% ownership stake in her late grandmother’s beach house. The title company or attorney should have verified that probate was 100% closed before allowing parties to sign.
3. Fraudulent Deeds (Title Theft)
The FBI has reported that quickclaim deed fraud is on the rise! This means that fraudsters are stealing homes! Our office has noticed this happening especially with land transactions. Fighting fraud can be done in several ways and at Preferred Settlement Services, we take all precautions including thorough ID checks. We also offer additional Fraud Protection Services that can be implemented at any time, but most commonly at the time a property is purchased.
Example: A man assumed the identity of a vacant land owner in Venice and sold the property, unbeknown to the real property owner.
4. Boundary Disputes (Bad Surveys)
Believe it or not, it was not uncommon for trees to be used as landmarkers back in the day (reference the second paragraph “Nineteenth Century Public Land Surveys“). Whether it was a tree removed or a misplaced marker, boundary disputes will occur. To avoid this, a quality ALTA survey can be ordered during the closing process.
Example: A Sarasota pool encroached 4′ into a neighbor’s lot. It cost $25k to move it!
5. HOA/COA Nightmares
According to TB Bank research, “condos play an outsize role in Florida.” This means assessments galore! In closings with HOA and COAs, our title manager will order an estoppel letter or estoppel certificate. This is a document, signed by the seller, that verifies the current status of an HOA/COA agreement, outlining any outstanding obligations.
Example: A buyer owed $8k for prior owner’s unpaid special assessments.
6. Open Permits (From DIY Renovations)
Unpermitted pool cages, decks and fences, OH MY! This can lead to significant issues for both the buyer and seller such as delayed closings, higher costs, legal liabilities, and voided insurance coverage. This is why checking county permits during the closing process is crucial.
Example: A $500k Bradenton deal died because of an unpermitted 2010 bathroom.
7. Divorce/Marital Claims
If a home was purchased during a marriage, it most likely will be considered a marital asset, no matter whose name is on the deed. To prevent closing issues, it is important to always know all parties’ legal marital status and to confirm all divorces have been settled during the title search.
Example: An ex-wife sued to overturn the sale of a home three years later. Yikes!
As you’ve probably discovered by now, a clear title is the foundation of homeownership. Protect your investment, verify before you buy, and don’t skip the title insurance!