There are a wide variety of factors that can cloud a property’s title, but the most common issues tend to fall under one of three specific categories, and they all start with the letter D. You can usually group a fair amount of title issues into one of the following groups - Delinquency, Divorce and Death. Let’s take a closer look at the three D’s of title defects in today’s blog.
Title Defect #1 - Delinquency
Let’s start with title defects that fall under the category of delinquency. These issues are typically in reference to a debt that has gone unpaid and is now linked to the property. Some common examples include unpaid property taxes, overdue mortgage payments or mechanic’s liens for unpaid improvements made to a property. If the property owner owes a debt to another party, that party may place a lien against the property. This lien will need to be settled prior to closing or as stipulated in a closing agreement so that these debts don’t become your problem. Even if you weren’t responsible for creating the debt, if you buy a property and discover that a lien exists against it, you may be on the hook for settling this debt, unless you’ve secured an owner’s title insurance policy.
Title Defect #2 - Divorce
Divorce can also complicate property sales. Your former spouse may still have a legal claim to the property, or perhaps they were never officially added or removed from the title, and that can make a sale a little more challenging. Marriage, divorce or name changes can all cause problems for a future sale if they aren’t meticulously or officially recorded. Even if you split amicably with your spouse and you assume the title is clear, if specific steps weren’t followed, there’s a possibility that clouds will remain on a title. A title services company can help sort these out so they don’t delay or derail a sale.
Title Defect #3 - Death
Finally, the third D that can lead to title issues is a property owner’s death. Children may fight over how a property is divided or sold, heirs may come out of the woodwork or be hard to track down, or to probate process can lead to the discovery of liens or boundary issues that went unnoticed until an owner died and a more thorough review of the property was conducted. It is very important to create a will and update it regularly so that there is no confusion as to how you’d like the property to be passed on once you’ve died. The creation of a will won’t ensure there aren't other title clouds associated with a property, but it can avoid disputes or delays during the probate process.
Let us investigate these three D’s and all other potential sources of a title issue so that you can have confidence that you’re buying a property free from title defects. To learn more about our investigation process or for answers to specific questions you have, connect with the team at Commercial Partners today at (612) 337-2470.