Seven Title Defects That Can Sabotage Your Real Estate Deal

When you are looking to purchase real estate, it is not enough to examine the physical property itself. You also need to look into the legal state of the property to determine if there are any title defects, or else face serious potential legal and financial consequences that can ruin your transaction. If you don’t have the assistance of legal counsel and a reputable title agency, here are seven title defects that can sabotage your real estate deal:

• Errors in public records
  • A relatively common title defect seen in some real estate deals involves errors in public records. There may be missing information, like unrecorded owners, or it may record incorrect information about the property in successive deeds, sometimes dating back decades, creating discrepancies between those records and the deed which need to be resolved.
• Unpaid mortgage or lien
  • Another issue often seen in real estate disputes is an unpaid mortgage or lien. These types of title defects can occur when a prior owner took out a loan or mortgage on a property but concealed it or failed to pay it off before selling the house, which can create serious disputes between an unwitting future buyer and seller.
• Unpaid property taxes
  • If a property owner has failed to keep up with their property taxes, it can result in a municipality or a private investor obtaining a lien against the property. Before the transaction can be completed, those taxes will need to be paid (including any additional fines or fees for late payment) at or before closing, or else your real estate deal could be ruined.
• Disputed boundaries or survey results
  • If the boundary lines or survey results of your property are in dispute, that can result in serious issues. Not only may it ruin your transaction, it can give rise to disputes with neighboring property owners, who may question the exact boundaries of your property and where it might affect theirs. Inaccurate surveys may also create issues regarding the locations of fences and driveways, and may even affect physical access to one of the adjoining properties.
• Undisclosed easements or covenants
  • Easements and covenants are types of non-possessory property rights that others may have over your property. When these are not disclosed properly during the real estate transaction, they are considered title defects. While such easements and covenants must ordinarily be recorded, there have been cases involving a prior owner giving a neighbor verbal permission to cross or use a portion of property, or simply failing to prevent the neighbor from doing so. This can later leave an unwitting buyer with potentially costly litigation to deal with against the neighbor’s claims of use or access.
• Undisclosed ownership
  • If a seller fails to fully disclose who owns a property, it can result in serious legal issues. This may come up if a seller is attempting to sell a property without the knowledge or consent of their co-owners, or in the context of an estate. A buyer should always ensure that anyone claiming to be a fiduciary or representative of an estate has actually been appointed as the executor or administrator of the estate the person is claiming to represent.
• Forged or fraudulent documents
  • A thankfully uncommon but still potentially serious type of title defect may arise if the documents for purchasing a property turn out to be forged or fraudulent. If this happens, it may lead to far worse than simply invalidating the transaction if you are dragged into potentially lengthy and costly litigation involving the person committing the fraud and others directly affected by the fraud.

A real estate lawyer can assist with various aspects of the home buying process, including preparing and reading contracts, performing a title search, and closing the deal. The attorneys at Hunziker, Jones & Sweeney are skilled and experienced in the aspects of real estate law to ensure a smooth process as you purchase your new home. Contact the Law Offices of Hunziker, Sweeney & Jones at (973) 256-0456 or visit our contact page to learn more.