The process of buying real estate is a complex journey defined with various considerations and potential pitfalls, one of the most critical being title defects. These defects can encompass a range of issues that may affect the ownership and rights associated with a property.
When looking to purchase real estate, you should be aware of several types of title defects that could impact the property’s ownership and your investment. These include the following.
Unknown easements
If a property has unknown easements, it means that there are undisclosed rights granted to another party to use the property for specific purposes. These easements could include utility access, rights-of-way or shared driveway agreements among others. Discovering unknown easements after purchasing a property could lead to restrictions on land use or unexpected obligations affecting its value and your ability to fully utilize the property as intended.
Public record errors
Public record errors such as mistakes in property descriptions, inaccurate recording of deeds or clerical errors can also result in title defects. These errors may occur during the recording process at the county recorder’s office or due to incomplete or outdated information in public records. Public record errors can lead to disputes over property boundaries, ownership rights or the validity of recorded documents.
Liens
If a property has liens, it means that there are legal claims against the property for unpaid debts or obligations. Liens can arise from various sources including unpaid taxes, mortgages, judgments or mechanic’s liens for unpaid contractor work. These liens can cloud the title and affect the property’s ownership rights potentially leading to foreclosure or legal action by creditors.
Unknown encumbrances
An encumbrance is any claim or liability that affects the property’s title often restricting its use or transfer. These can include easements, restrictive covenants, leases or other legal obligations that may not be apparent from a cursory title search. Discovering unknown encumbrances after purchasing a property can lead to unexpected limitations on its use, potential conflicts with neighboring properties or challenges in obtaining financing or insurance.
When looking to purchase real estate, consider getting legal guidance to help ensure a thorough title search is conducted and any potential title defects are addressed before finalizing the transaction. Too much is at stake to cut corners in this regard.