Common title problems
We often hear about “title problems,” but really what are those things that foul title and prevent sellers from being able to convey clear title and close a transaction:
1) The most common title problems arise from unreleased mortgages from prior owners. And in most cases the problem is a paperwork problem, not the substantive issue that the mortgage remains unpaid. Rather, typically, somewhere in prior mortgage activity the old lender simply failed to place a mortgage satisfaction of record. Ivy Pointe Title tracks those down to promptly close your transaction.
2) Other monetary liens. Additionally, mechanics liens, tax liens (federal and state), judgment liens, and other monetary liens can impair real estate title.
3) Covenants. Whether it is a residential subdivision or a commercial user, frequently developers and sellers want to restrict the use of property prospectively. These restrictions can include, for residential users, building set backs (which stand independent from zoning setbacks), minimum square footage restrictions, and height restrictions. These are among the most common that could interfere with the buyer’s intended use of the property. In the commercial setting, banks, drug stores and gas stations are notorious for placing restrictions on prime sites preventing competing uses in perpetuity.
4) Easements. It is not at all uncommon in both the residential and commercial setting to have easements that cross significant portions of real property that benefit other property, for storm water detention, public utilities, and ingress and egress. An otherwise perfectly developable piece of property may well be encumbered by an easement benefiting another than renders the property undevelopable.
5) Problems in foreclosures, divorce, probate proceedings and bankruptcy proceedings. Title to real estate frequently passes not by deed, but through court proceedings that establish the new owner. These proceedings then must have proper service upon interested parties, and appropriate adjudication of the dispute. For example, title arising from a foreclosure proceeding is not clear if the foreclosing attorney failed to name all interested parties in the proceeding. In a divorce, frequently we see parties failing to actually follow through with that which the Judge ordered. These matters must be checked carefully and corrected if deficient before clear title can be conveyed.
Obviously, certain matters that are problems to one buyer (a setback restriction or a use covenant) will not matter at all to another buyer. Thus, reading the underlying instruments and considering them in light of the buyer’s intended use of the real estate is critical to a successful real estate transaction.
Thus, please read these additional blog entries:
Don’t just buy a title insurance policy; read the policy
How title insurance can get your transaction closed
I’m paying for a policy for the lender. Do I have to buy an Owner’s policy as well?
Title insurance — a one time premium for a lifetime of coverage