Selling or buying a home? Protect yourself from any liabilities or obstacles during the closing process by ensuring the property has a clear title. Addressing any title defects early can help pave the way for a smooth real estate transaction.
What Is a Clear Title?
A clear title is a legal representation of the ownership of a property that has no outstanding claims or issues to impede the transfer of ownership to another person. A clear title has two main components: complete ownership rights and no disputes or easements.
A clear title ensures legal ownership of said property to the current owner. This allows for a smooth sales transaction for all parties involved, especially for the buyer to protect their investment. A clear title protects against any mitigating financial risks caused by claims regarding liens, ownership, and other potential queries.
How to Get a Title Search
Before the closing date, a property title search must be performed. This is done through the local town or city’s land records and gives a history of the said property. The information collected includes names, deeds, and court records pertaining to the specific land in question.
By examining public records of the property, the current landowner’s name and the address of the property will be needed. Access to the tax assessment record will offer a general description of the property, the parcel and lot numbers, and all tax details since the property was first registered. This information will help to identify the ownership history to establish a chain of title to the land.
A title search will also identify encumbrances or liens filed against the property. Verifying legal descriptions of the property will prevent future risks of disputes with neighbours and/or zoning bylaws.
As a title search involves time, patience, and sufficient costs, it is recommended to hire a real estate law firm to manage all title searches. A professional will have access, knowledge, and experience in performing a title search.
How to Clear Title Problems
Resolving title problems can take time, patience, and lead to heavy financial costs. The top priority is to identify title issues such as any unpaid liens or mortgages, boundary disputes, or easement discoveries. With any home purchase, it is crucial to pay off any outstanding debts, both on the buyer and seller’s part.
A dispute lawyer may be needed to handle any boundary disputes as improper documentation can lead to a legal case. This also applies to an undiscovered easement that may have existed in the title ownership of previous property owners. Legal representation should also be employed with negotiations between conflicting parties and any necessary court filings of legal action.
To protect the interests of the investment, all title issues should be resolved before the closing date. The smallest details, such as identification or misspelled words, can create a legal problem in the days, months, and even years to come. With title issues, the ownership of the property can be in jeopardy and any financial attributes could be lost.
The Role of Title Insurance
Title insurance protects your investment against any title defects, including those that may have been present before the sale was completed. This type of insurance policy offers financial and legal coverage for ownership challenges with the transaction.
There are two main types of title insurance: lender’s and owner’s. Lender’s title insurance protects the financial lending firm, meanwhile owner’s title insurance protects you, the homebuyer.
Note that tile insurance differs from property insurance as the latter provides financial coverage in the event of damage, theft, or personal injury on the property itself.
Common Title Problems
Below are some common title insurance problems that buyers and sellers could face.
- Unpaid Liens or Mortgages: If the current mortgage is behind on payments or if there has been a judgement placed against the property for unpaid debit, the title will need to be cleared. Any legal claim against said property can be made for unpaid property taxes, credit card bills, child/spousal support, and/or any creditor who has presented a case in the courts.
- Boundary Disputes: With a boundary dispute, the legal description of the property within the title and deed of the home differs from the legal property description of neighbouring plots. The property in question will need to be surveyed and this information will need to be submitted to the courts.
- Undisclosed Heirs or Missing Wills: One of the biggest title issues is the discovery of unknown heirs to the property during or after the sale is complete. Whether the owner of a property dies without a will, or a family member comes forward to claim the property years later, the homebuyer might see the ownership title be contested.
- Errors in Public Records: With the modern advancements of computer technology, errors in public records are rare but still can occur due to clerical oversight. A misspelled name, address, or incorrect land measurement can see the sale of the property delayed or halted.
- Fraudulent Conveyance: During the transfer of title ownership of the property, documents are forged to avoid the creditor from receiving monies owed to them. This is also seen by fraudsters who use personal information of a property owner to gain access to the monetary value of a mortgage or property without the homeowner’s knowledge.
- Unreleased Prior Mortgages or Deeds of Trust: This title issue is solely the responsibility of the homeowner. A mortgage or Deed of Trust that has been paid in full must be reported to the appropriate land record office for the deed to be released and the lien to be removed.
Hire a Real Estate Lawyer from Zinati Kay to Clear Your Property Title
Are you considering putting your home on the market or looking to purchase your first home? The team at Zinati Kay – Real Estate Lawyers can help! With more than 25 years of experience closing over 21,000 real estate transactions, we offer assistance with all of your buying, selling, refinancing, or title transfer needs. Call us today at (416) 321-8766 or email john@zinatikay.com for information on clearing your property title.