A title is a legal term that means registered owner of a property. A title transfer is assigning ownership, or part of the ownership to another party.
When purchasing a property, the title must be transferred from the seller to the new owner. However, it is not always as simple as signing a document, a large number of properties may require work to "clean up" issues with a title.
Here is a list of the five most common issues:
Property has a Lien
If any of the previous title holders had outstanding debt, such as unpaid property taxes, general contractor bills, or a judgement from the court to pay off a creditor, those companies may have placed a lien on the property.
A property lien is a legal claim on assets that allows the holder to obtain rights to the property if debts are not paid. If there is a lien on the property you are purchasing, you may inherited it upon closing.
This is an example of a very common issue that can be resolved by your lawyer on closing. Using a title search will identify if there is a lien on the property and you can work with your lawyer to address and resolve the issue.
If you will not be getting a survey on your potential property before closing from the sellers you run the risk of having a boundary dispute with neighbouring properties. A boundary dispute is somewhat common and the only way to resolve this issue is through an up-to-date survey on the property.
Your Real Estate lawyer may recommend a property survey if there is evidence to suggest it would be beneficial. However, this is quite often not the case, few closings include property surveys because of the cost and length of time it takes to complete. Without taking proper protection, this potential issue could be a serious financial burden to resolve.
This is a case where title insurance is a great option to mitigate some of the unknowns and protect future interests in the property.
Illegal Past Deeds and Fraud
There are a number of illegal actions that may impact the sale of a property and the transfer of a title in the future. That could include deeds made by minors, people lying about their marital status, an undocumented immigrant. Illegal past deeds such as this may pose an issue to the transfer of a title and cost significant amounts to rectify.
In addition to the above illegal actions, fraud is another potential issue that may impact title transfers but is much more difficult to identify. When a lawyer conducts a title search you can identify anything that can be searchable through public documents and registrations. However, fraud is often undetectable through these available documents making it one of the most difficult of these common issues to protect against.
When you purchased the property, you may not have been aware that a third-party may hold claim to part or all of the property from a previous event such as a lien. This may limit what you as the owner will be able to do with the property. These limits are known as encumbrances and are placed on the property itself, not the owner.
A real estate lawyer for title transfer will help discover if the property in question has unknown encumbrances. Some encumbrances are welcomed by owners, such as zoning laws that restrict properties in an area from being used for commercial purposes. Others can be more troublesome, like liens placed on a property that seek repayment of debt.
Almost all property, particularly in densely populated areas, is encumbered in one way or another. That is why it is important to have a knowledgeable real estate lawyer by you side when learning if there are encumbrances on a property
Public Record Errors
Whether it be adding an extra zero or misfiling a document, public record errors do happen. Unfortunately, when filing and clerical errors occur, they are often difficult to detect or notice because sometimes they blend in easily. Dealing with public record errors can cause serious financial stress on the title owner and be very time consuming to rectify.
How Can I Protect Myself?
Throughout this article we’ve listed all issues that may arise from a title transfer and likely caused you lots of anxiety. You're probably wondering now, what can I do to protect myself from all these problems. The answer is simple, get title insurance.
While every policy is different and we recommend checking your specific policy for the details, but in general, title insurance will cover you for all of the above title-related issues and more that can affect your ability to sell, mortgage, or lease your property in the future, or its value.
When conducting a title transfer on a property it’s wise to use an experienced real estate lawyer that can help you ensure you have proper protection and don’t ignore any serious issues.
Send us an email and we would be happy to answer any questions you have or provide recommendations for your situation.
Important Note: This article is not Legal Advice. No one should act, or refrain from acting, based solely upon the materials provided on this website, any hypertext links or other general information without first seeking appropriate legal or other professional advice.