A thorough title search is an important part of purchasing any property. The title search involves examining the public records to establish the legal ownership of the property and uncover any potential issues that might interfere with the property transfer.
Understanding the three most common title search issues helps you prepare to address them.
1. Liens on the property
Liens are legal claims against a property. You cannot transfer ownership of the property without resolving any outstanding liens. Your title search might uncover tax liens, mechanic’s liens or judgment liens. To resolve a lien, the seller must pay off the outstanding debt or negotiate with the lienholder to have the lien removed. In some cases, the buyer may agree to take on the responsibility of paying off the lien in exchange for a reduction in the purchase price.
2. Encroachments
An encroachment occurs when a portion of a property extends onto a neighboring property or violates zoning regulations. This can include fences, sheds or even part of a building. To resolve an encroachment, the property owner may need to remove the offending structure or seek a variance from the local zoning board.
3. Errors in public records
Mistakes in public records, such as incorrect property descriptions or omissions in the chain of title, can cause issues during a title search. These errors are often resolved by working with the appropriate government agency to correct the records. In some cases, you may need a quiet title action to establish clear ownership of the property.
Without a title search, any of these complications could jeopardize your ownership status of the property, even after closing. Protect your investment with pre-emptive measures if the title search reveals any potential challenges.