What is a Real Estate Title?
A real estate title is a legal way of holding ownership over a piece of real estate. It is a bundle of rights in a piece of property in which a party may own a legal or equitable interest. When a home or property is sold, the title transfers from one party to another. A title shouldn’t be confused with a deed, although some may refer to both terms in the same way. A deed is an official written document declaring a person’s legal ownership of a property, while a title refers to the concept of ownership rights. Title companies normally handle the “closing” which includes title and deed transfer. Titles are only transferred once sellers perform all requirements of the contract.
There are times when title problems arise that the seller had no knowledge of. This is why buyers and sellers typically acquire title insurance. Title issues can prevent a closing from going through, and some issues may suddenly appear at the last moment. Here are some of the most common title problems:
A lien is when someone can make a legal claim to your property, usually a creditor. For instance, if you have a mortgage, then you definitely have a lien on your house. Liens can be voluntary or involuntary (consensual or nonconsensual). Taking out a mortgage is a type of voluntary lien. Liens taken out by contractors, government agencies, or another kind of creditor are involuntary liens.
The most straightforward way to remove a lien from your property is to satisfy the debt. While the law does not require that liens be removed before title to property can be sold or transferred, the lien will need to be cleared up if the buyer needs financing or wants a clear title. If the property is transferred without the lien being paid off, it will remain on the property.
Encroachments with Neighbors
Encroachments are places where the neighbor’s land and your land overlap. This can happen when someone builds on the neighbor’s property or it overhangs. Even if you are okay with the encroachment, the prospective buyer may not. Because the encroachment makes property boundaries fuzzy, it will likely cause title problems. A survey is critical before closing on real property.
Errors in Public Records
A misspelled name or a wrong numeral can create errors in public records that can cause problems for the property’s chain of title. Unfortunately, completely avoiding errors in public records is almost impossible since buyers have no control over a property’s past and mistakes may have been made by others filing and recording these documents. An owner’s policy and title insurance will help protect your ownership rights from these errors found in public records.
When a person passes away, the ownership of their home may fall to their heirs or others named in their will. Sometimes, those heirs are missing or unknown at the time of the death. Family members may contest the will for their own property rights. It is possible that these scenarios could affect your title to the property, long after you have purchased it. Also, an unknown will discovered after the purchase of the property could put the new owner’s title in jeopardy.
Deeds can sometimes be illegal. If the deed was signed by someone other than the owner, a minor, unauthorized corporate agent, or if they were of unfit mind, it can affect the free and clear ownership of the property. Criminals sometimes alter original, valid documents by changing some non-material details on the original deed and re-record it with the updated (fraudulent) information.
An easement is actually a type of encumbrance. An easement is when another party has the right to use your property for some specific purpose. For instance, a utility easement might be where a property does not have direct access to the sewage line so the pipes run under a neighboring property. Oftentimes, these types of easements are overlooked because they won’t affect the new owners. However, if the new owners plan to remodel or expand the home, this could be very costly.
Other types of easements may involve historic preservation or environmental conservation which can limit the future development of the property.
When you sign a contract to purchase real estate in Florida, the contract should state clearly that the seller is the actual owner of the property and he/she has a right to convey title to the property. Generally, you should obtain a General Warranty Deed because this offers the best protection against title defects and contains covenants that certain facts are true. When a General Warranty Deed is given, the grantor promises that the grantor will defend and protect the grantee against the rightful claims of third parties to the property (warranty of title). The grantor also promises that the property is free of encumbrances (covenant against encumbrances).
I’m Rob Robinson and I’m proud to call the sunshine state my home. As a 5th generation Floridian, I’ve been practicing Florida law for over thirty years and have extensive knowledge and experience when it comes to local government and real estate title issues. If you have questions about title defects or issues with the title of a piece of property, please contact me. I would be proud to be an effective advocate for all of your legal needs.