Title Issues to Watch Out for at Closing
Title companies say that in more
than one-third of all real estate transactions they must undertake
“extraordinary work” to address title issues and ensure the deal makes
it to settlement OK.
From that search, unresolved title issues can surface. And, any unresolved title issue – even if relatively minor – could jeopardize settlement. Here are some common issues title companies say pop up:
Mechanic liens: These are liens placed against a property that a general contractor or someone who worked to improve the home filed before beginning the work. This is to ensure the contractor gets paid, and the lien is to be released when the job is complete. The procedure for how mechanic liens are filed and processed vary widely from state to state. But problems can surface with these liens when the contractor doesn’t file a “satisfaction” of the lien and, thereby, the lien remains on the property title. Some mechanic liens will expire after a certain amount of time. Regardless, if a mechanic lien is still present when trying to go to settlement, the process can be time-consuming and could prompt a delay in closing. (Check out state guidelines for filing and processing a mechanic’s lien at www.fullertonlaw.com.)
Bankruptcies: This can be cause a problem, for example, when a seller buys a home while single but then marries someone with a recent bankruptcy. The title company must ensure the new spouse has signed off on the deed and also that the bankruptcy case has been discharged. If not, the title company would need to petition the court to release the property from the bankruptcy process.
Divorces: This often causes problems when a divorced spouse doesn’t remember to remove a lien for child support, even though the debt may have been resolved long ago. Also, lien issues may arise from past-due spousal support or delinquent taxes.
View a list of more than 70 possible title problems.
Source: “These Common Title Problems Can Snag Your Home Closing,” The Washington Post (June 20, 2016)
Read more: Title Snafus and YouTitle companies will often scour public records back 50 years or more to look for past deeds, wills, divorce decrees, bankruptcy filings, court judgments, trusts, and tax records that could be defective or outstanding.
From that search, unresolved title issues can surface. And, any unresolved title issue – even if relatively minor – could jeopardize settlement. Here are some common issues title companies say pop up:
Mechanic liens: These are liens placed against a property that a general contractor or someone who worked to improve the home filed before beginning the work. This is to ensure the contractor gets paid, and the lien is to be released when the job is complete. The procedure for how mechanic liens are filed and processed vary widely from state to state. But problems can surface with these liens when the contractor doesn’t file a “satisfaction” of the lien and, thereby, the lien remains on the property title. Some mechanic liens will expire after a certain amount of time. Regardless, if a mechanic lien is still present when trying to go to settlement, the process can be time-consuming and could prompt a delay in closing. (Check out state guidelines for filing and processing a mechanic’s lien at www.fullertonlaw.com.)
Bankruptcies: This can be cause a problem, for example, when a seller buys a home while single but then marries someone with a recent bankruptcy. The title company must ensure the new spouse has signed off on the deed and also that the bankruptcy case has been discharged. If not, the title company would need to petition the court to release the property from the bankruptcy process.
Divorces: This often causes problems when a divorced spouse doesn’t remember to remove a lien for child support, even though the debt may have been resolved long ago. Also, lien issues may arise from past-due spousal support or delinquent taxes.
View a list of more than 70 possible title problems.
Source: “These Common Title Problems Can Snag Your Home Closing,” The Washington Post (June 20, 2016)
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