In real estate transactions, there is the risk of a title defect. This can sometimes complicate the process. There are even instances where a title defect could be serious enough to derail the transaction entirely, which can be highly problematic for all parties involved.
But what do these title defects look like? Let’s take a look at a few common examples.
A lien on the property
For one thing, there could be a lien if the property owner owes a debt to another party. For instance, maybe a contractor worked on renovating the property, so there’s a mechanic’s lien that will exist until they are properly paid for that work. A lien could also be set up if there are unpaid taxes in the owner’s name.
Multiple property owners
Another defect could be if there are multiple people who all claim that they have ownership rights. For instance, maybe one person is trying to sell a commercial property that they inherited from their father when he passed away. However, a sibling says that they also inherited an equal share, so the property can’t be sold or transferred without both owners being involved.
Property easements
Finally, there can sometimes be issues if there is an easement on the property. This allows someone else who is not a property owner to use that land in a specific way. It’s important to determine if the easement runs with the land and would have to be upheld by a new property owner after a transfer, or if it’s just a personal easement that can be eliminated once the property is sold.
Any of these issues can complicate a transaction, and that’s why it’s so important for all parties involved to understand their legal options.