When you have a clear title on your property, there is no doubt as to who owns it. In other words, after you close on a residential property, you have assurances that no other party has a claim on it. This can be a relatively confusing concept for someone who has never owned a home before, but here are a few examples of why a private citizen or a government entity would make a claim on your house after you buy it:
- The previous owner had an addition put on their home and still owes the contractor money
- The seller has unpaid child support debts
- The owner has unpaid taxes
Although that list is not exhaustive, it does highlight circumstances in which someone could place a lien on the home you intend to buy. Liens are filed through the court, and they give someone the ability to hold onto an asset until a debt has been paid. Mortgage lenders require buyers to purchase title insurance because it identifies liens, debts, and claims on the home. They also protect you if you discover defects in the title after the sale of the house.
How to Obtain a Clear Title
During the home-buying process, you will likely purchase title insurance. After which, a title company will execute a title search. During this time, they look at the title’s history and ensure a clear line of succession from one owner to the next. For example, they may discover that the house is tied up in probate litigation, and multiple heirs are fighting over ownership. That is an extreme example, but it can surface.
You can resolve these issues, and they don’t necessarily mean that you can no longer go through with the sale. This is why having an attorney is paramount. Your real estate attorney will guide you through the negotiation process that comes with clearing a title. One of the most common liens (and one you may have overlooked) is from the previous owner’s mortgage. That lien gets resolved when the home is sold. Any outstanding debt is paid off with the money that the buyer gives to the seller.
Why You Should Have Title Insurance
Typically, the title search will take up to two weeks, and if there are no liens, easements, or encumbrances, they issue you a policy. This protects you against anything that doesn’t surface during the title search. If you bought property based on a forged deed, or you bought the home from someone who didn’t legally own it, then the policy may include a cash settlement to recoup the money that you gave the fraudulent seller. Because the easiest way to resolve a lien is to pay it, your title insurance policy may also cover these costs or pay for you to fight the issue in court.
Have Csépes Law Offices Represent You During Your Real Estate Transaction
Buying or selling a home is a significant financial transaction, and having a clear title is only one component of a successful real estate deal. Csépes Law Offices will help you navigate potential title issues while ensuring that you and your investment are protected. Contact us today to schedule a consultation for more information about how we can assist you.
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