Lets say that you are buying or selling a home, and the title report shows that there may be an issue getting good title. Your real estate attorney will do the legal analysis as to the problems that may show up, but it is important for you to know about some of the more common problems that can arise when trying to get good title.
Why is Good Title Necessary?
Good title is vital because it is the seller’s way of guaranteeing that he or she owns the property full and clear (or can otherwise transfer ownership full and clear at closing). If that is not legally possible, you as the buyer are purchasing something the seller can not legally sell. That is a huge problem, and not one that you want as a buyer.
Title looks back on the chain of ownership, even past the current seller, to make sure that down the road of purchasers and buyers, each seller has conveyed a valid, full, and legal interest in the property.
Title is usually investigated by title companies and reviewed by title or real estate attorneys. Much of the investigation is done by searching public records. Your attorney’s job is to try to clear up problems that may show up on the title report before closing and to advise you not to close should there be a title problem that is insurmountable.
Correcting Title Problems
Some problems are easily correctable and may even be common. For example, many people who have paid off mortgages may not have a satisfaction of mortgage recorded. Thus, an already paid mortgage is shown as a cloud on title. This may be cured by having the satisfaction filed by the mortgage company.
In other cases, there may be clouds on title that the parties can “fix” at the closing. Say, for example, there is an outstanding judgment that has attached to the home and shows as a lien in the public records. The parties can always opt to pay the judgement off at closing (or if you are the seller, you can agree to reduce the sale price by the amount of the judgment).
Serious Title Problems
Some title problems are more serious. It is common for properties to have additions or modifications to property that may be violating local or state building codes or municipal ordinances. They may be accruing fines/code violations daily. The parties now must figure out not just how to fix the physical problem that is violating code, which could be a costly fix, but also, how to pay off the already accrued fines.
The foreclosure crisis also created title problems as foreclosures were rushed through, often sloppily. In some cases, foreclosure cases filed by banks in the past may have failed to sue people with an interest in the property or may have misnamed or failed to serve people with an interest in property. This could create a serious problem with the transfer of title, and one that is not so easy or quick to fix before a scheduled closing date.
Make sure you are purchasing clear title when you buy a house. Contact real estate attorney Agnes Rybar LLC, to make sure you have representation in any New Jersey real estate transaction.
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