Types of Home Title Hazards
Performing a home title search is no small task. As we discussed in a previous post, it’s imperative to have a professional title company tackle this job for you – whether you’re a first-time buyer or an experienced investor or realtor.
A thorough title search reveals potential hazards that could delegitimize your real estate transaction. But what are some of the home title hazards a title company can identify?
Discoverable Hazards
In most cases, title hazards are ‘discoverable’. In other words, they are potential problems that can be found by examining all the available paperwork for a specific property.
This is by no means simple or straightforward. The title company performing the search needs to understand real estate, associated laws, and legal jargon, as well as be familiar with all the different kinds of documents that need to be scrutinized. But, essentially, discoverable hazards are documented and will be apparent to a trained professional.
Discoverable hazards include:
- Outstanding mortgage loans or property taxes that could affect what you can do with the property, especially if you are trying to resell it for a profit.
- A court judgment or outstanding construction liens against the property, which can prevent you from buying the property, or slow down the transaction until the judgment or lien is resolved.
- Utility easements mandate that utility companies have access to part of the property, preventing construction and limiting landscaping in that area.
- If the legal description of the property is incorrect, it can render the deed defective and affect the chain of title.
- An improperly probated will can result in outstanding taxes on a property, or lead to disputes over who has inherited the property.
Hidden Hazards
Hidden hazards are more difficult to identify. These are issues with the title deed that are not necessarily documented, or problems resulting from fraud or incompetence.
An experienced title company will be able to uncover some hidden hazards during the title search – forged signatures, for example. However, other hidden hazards are simply unforeseeable, which is why it’s important to purchase title insurance during your transaction.
Hidden hazards include:
- Forged deeds that can render the property transaction invalid, even if they are further back in the chain of title than your current transaction.
- Scam artists will use identity theft to pose as realtors, loan officers, or even property owners, making a profit from fraudulent real estate deals.
- A married seller who presents themselves as single is a huge problem. There may be a lien against the property in their spouse’s name that they are trying to hide, or the unknown spouse may return at a later stage claiming to own part or all of the property.
- Similarly, an undisclosed heir may have a legitimate claim to part or all of the property.
- Deeds or title transfers signed by minors or the mentally incompetent may be void.
- Clerical errors and mistakes in public records – such as incorrect spelling of names and addresses – can delegitimize a title or transaction. The same goes for confusion resulting from transactors with similar names.
What to Do about Title Hazards
Firstly, always opt for a professional title search from a well-established and experienced company. Florida Home Title Company is owned and operated by attorneys; we have the expertise to perform in-depth title searches that uncover all kinds of hazards that may be overlooked by other title companies.
Secondly, purchase title insurance when buying a property. While it’s unlikely you’ll need to use it, it could save you from very expensive losses if a hidden hazard crops up.
Contact us for more information about title hazards, title searches, and title insurance.