Buying a new home in Delaware is exciting, but it can come with challenges, like dealing with title defects. These issues with the title can affect your property rights and cause problems later on.
Land Title Guarantee Company reported that title defects are quite common in home purchases, with 36% of all transactions having an issue with the title. Knowing what title defects are and how they can impact your home purchase helps ensure a smooth transaction.
Liens against the property
A common title defect is liens against the property. Liens are legal claims due to the previous owner’s unpaid debts, such as mortgages, property taxes or contractors’ fees. If you buy a home with existing liens, you might have to pay these debts.
Errors in public records
Clerical or filing errors in public records can also cause title defects. These mistakes can include misspelled names, incorrect property descriptions or wrong document filings. Such errors can create confusion about who rightfully owns the property.
Sometimes, people might create deeds illegally. This can happen if a previous owner was not mentally competent, was a minor or committed fraud. An illegal deed can affect your home’s title validity.
You might also encounter undiscovered encumbrances. These are restrictions or covenants that limit how you can use the property. For example, there might be building restrictions or limitations on using the property for certain businesses.
Occasionally, missing heirs of previous owners can emerge and claim ownership rights to the property. This risk is especially high if a person inherited the property and the full legal process was not properly followed.
Conducting a thorough title search and considering title insurance are essential steps to protect yourself from these issues. Remember, understanding and addressing title defects is key to securing your ownership and ensuring peace of mind in your new Delaware home.