When you purchase a home, it is often life changing. It’s one of the most significant decisions most people make in their lifetimes (both financially and emotionally). Make sure that you are protected when you take the momentous step towards homeownership by avoiding common title problems that many experience during the home buying process.
5 Common Title Problems During the Home Buying Process:
- Unpaid Liens: Existing liens are a frequent challenge during the sale and purchase of homes in the United States. Liens can originate from various sources, such as Homeowner Association fees, unpaid taxes, etc. Potential monetary responsibilities related to the property you are considering purchasing should be discovered through a thorough title search to avoid issues at a later date.
- Breaks in the Chain of Title: Ownership of a home can change hands numerous times; sometimes by being passed down as an inheritance other times through a sale. As the property passes from owner to owner, the chain of title is developed. When a link in this chain is missing or broken, problems can crop up during the closing process.
- Inaccurate Legal Description: Properties have legal descriptions recorded in the local court system. The legal description includes boundary lines, dimensions of the structure, permanent outbuildings on the property, etc. In some case, the legal description of the property at hand may include an error. These seemingly insignificant errors can cause problems during closing. A simple typo changing a directive from east to west can disrupt the purchase process.
- Issues with Foreclosed Properties: When purchasing a foreclosed property, homebuyers may discover that there are additional issues that can disrupt closing. Lenders may not have notified all parties involved. The title might not be taken from the original owner. There may be other chain of title problems.
- Construction Liens: Home improvements are a regular occurrence. In fact, they’re very common just prior to selling a home. Homeowners seeking to get the highest price will often make needed repairs and/or renovate just prior to listing their home for sale. Unfortunately, some contractors handling this type of project may not pay their suppliers or subcontractors in full for products supplied or work completed. This leaves unpaid suppliers and/or subcontractors with the option of obtaining a lien against the property. This can obviously pose a problem for the new homebuyer during closing.
These common title problems occur on a regular basis – and they carry a great potential for unnecessary stress on closing days for new homeowners. Title problems can result in delays in the purchase process and can also have financial consequences for buyers.