When you are buying or selling a home, part of the transaction process will include a title search. This serves as a means of determining two key factors: the seller actually has the legal right to sell the home, and, the buyer is obtaining all the rights to the property upon taking possession. While the majority of real estate sales transactions don't uncover title problems, which are known as "clouds" or "defects," there are instances when title issues are discovered. If you encounter such a problem, it's important to know how to deal with common home title issues.
How to Deal with Common Home Title Issues
For those real estate sales transactions which do find title clouds or defects, a reputable title company or a real estate attorney can typically help to resolve such issues. Buying or selling a home is quite a process and there are many steps which take place from start to finish. For buyers, it's saving a down payment, getting pre-approved for a mortgage, setting aside money for inspections, earnest money, moving, and closing costs.
A study by the American Land Title Association showed that 25 percent of all residential property transactions require “curative action” prior to closing. Forgery is one of the more common problems that a title company may encounter when researching a residential property. Other common title problems include fraud, missing legal documents such as divorce decrees and wills, and undisclosed heirs. --Realty Times
For sellers, the process begins with decluttering, depersonalizing, disinfecting, and staging. Sellers can also incur expenses, such as professional staging, a pre-listing home inspection, buying a home warranty, moving expenses, and even closing costs. After a seller accepts a purchase offer from a buyer, it's on to the appraisal and inspections. Then, a title search is conducted to ensure the property title is clean and free of defects. However, this search can reveal problems and the parties involved will have to know how to deal with common home title issues:
- No satisfaction of a prior mortgage. While it might seem to be a very infrequent occurrence, it's quite common for a title search not to find a Satisfaction of Mortgage. This document is filed by the lender when the mortgage is amortized or paid-off by the borrower. Somewhere along the way, a clerical error occurred and no Satisfaction of Mortgage was recorded. The good news is, this can usually be easily be fixed by the closing agent.
- Judgment against the property owner. During the title search, a judgment might be discovered against the property owner. If it's not valid or the judgment has already been satisfied, just like the above scenario, it can be fixed with one of two documents: Release of Judgement or Satisfaction of Judgement. However, if it is valid and the debt is owed, most old judgments can be negotiated for 40 to 60 percent of the recorded amount. Judgments are negotiable because although awarded, does not immediately pay the prevailing party. It's the reason for the old legal saying, "there is no cash register at the courthouse."
- Liens for unpaid property and income tax. Just like the two prior situations, the title search might uncover a lien for unpaid property or income tax. If this has already been satisfied, proof is needed to go forward with the sales transaction. If the lien is still valid, the taxes and any penalties will need to be paid.
- Contractor or mechanics liens against the home. These liens are more common than other encumbrances, and, prevent the property from being transferred from one party to another until satisfied. Like a judgment, these are generally negotiable, but, will likely have to be paid to free the property.
If you are interested in selling or buying a home in Sonoran Mountain Ranch, whether it’s by North Sonoran Mountain Ranch Road, West Miner Trail, near the Peoria East Wing Mountain Preserve, or elsewhere in and around Peoria, contact us. We help buyers and sellers with the entire process to make it more exciting and enjoyable.