Does Your Potential New Home Have a Clear Title?

/in /by

When you buy a used car, it is very clear if there is a lien on the property. The lienholder’s name and contact information will be on the title, along with the owner’s information. But when you buy a home, you don’t have that transparency. Deeds or real estate titles do not list lienholders on the title.

You should never just take someone’s word for it that a title has no defects. Even real estate agents can be unscrupulous. So how do you know you have a clear title, and why it is important? Read on to find out.

Common Title Defects

A real estate deed may have any one of several title defects. A title defect is an issue with the title that makes it unlawful for the property to change hands. Some of the most common defects include:

  • Additional co-owners of the property or stakeholders in the property are not aware of the sale.
  • A tax lien has been put on the property that must be paid before it can be sold.
  • The owner, or a previous owner, may have obtained a loan using the property as collateral. If so, that lienholder has a stake in the property that must be settled before it can be sold.

There are several different ways that title defects can be discovered, but it takes an experienced professional to find the correct documentation.

Getting a Title Search

A title search is about more than just verifying who owns the property. Done by an experienced and reputable company, this service includes a diligent search into potential title defects to ensure that it is completely legal for the property to change owners.

Title Insurance

Even with a diligent title search, some defects may not come to light until after the sale of the property. If you buy a home with a title defect, you could find yourself booted out of your home with no notice, or it could cost quite a bit to straighten out so that you can stay in your home. Title insurance protects you and your lender from losses if it turns out not to be a clear title.

If you are looking to purchase a home, whether through an agent or a property owner, you should make sure that you don’t skip this important step. Contact us today to learn how we can help you protect yourself during your home purchase.