What to Do when Title Search Clouds are Found

When a home goes under contract for sale, a lot of moving parts go into play. Third parties jump into action, performing various duties. Among these are inspections, appraisal, a title search, and plenty more. Any of these elements can derail an otherwise valid real estate transaction. What’s more, approximately one-third of all pending sales incur title problems.

Common Title Search Clouds

Since about 33 percent of all pending sales involve title defects, it’s good to know which are the most often uncovered. The most common title search clouds are recording errors. This is simply an omission or mistake. Such problems are usually solved by tracking down the appropriate parties with the right paperwork.

“Before you buy a house, a search of public record will be made to discover if any claims or judgments have been filed against the seller that would prevent you from getting a ‘clear’ title to the property. But the title search may not uncover everything you’ll need to know. From public records, it’s possible to learn if anyone has sued and obtained a judgment against the seller. If so, any real estate he or she owns may become security for the debt, and the sale may not be closed until the judgment is either paid, released or disposed of in some way.” —The Chicago Tribune

Unfortunately, fraud is another common title search cloud. Forged deeds are out there and this scenario is generally difficult to resolve. Liens (as you might imagine) are also common title defects. Then, there are probate issues and foreclosures. The latter occurs when the foreclosure process was not done to the letter of the law.

Regardless if you’re a buyer or a sell, a title cloud is serious business. For sellers, it means they can’t legally sell their homes without reconciling the problem. For buyers, it means being disappointed at the very least.

What to Do when Title Search Clouds are Found

Fortunately, there are some ways to fix title search clouds or defects:

  • Consult a title lawyer or real estate attorney. The advice is particularly useful for sellers. Because if you do manage to sell the home without full legal disclosure, you’ll be at high risk for big time legal trouble.
  • Contact the original owners and have them sign a quitclaim deed. Sometimes, the original sellers are named on the deed. While that sounds strange, it does happen. So, contact the original owners and ask them to sign a quitclaim deed. If that’s not feasible, consult a title attorney or a real estate lawyer.
  • Have the lender execute a deed of reconveyance. Banks and credit unions can be very large institutions. The bigger, the larger the chance not all “i’s get dotted and t’s crossed.” Which can mean a previous mortgage payoff didn’t make it through the process. When this is the case, usually, a deed of conveyance execution is the right fix.
  • Request amicable parties to sign a quiet title action. This is a fairly common legal mechanism which can serve to put the transaction back on track. A quiet title action isn’t complicated to perform but it can easily yield huge results.
  • Payoff an existing liens recorded against the property. If you are the seller in the transaction, this probably isn’t your favorite option. But, it will do quite a lot, even though it comes at a cost.

If you are considering buying or selling a home in Orlando, contact us for the latest market information. We’ll also provide you with the right advice about the local real estate market so you make the best decisions.