When you look to purchase a home, you are probably a lot more concerned about the physical state of the property, or its price tag, than you are about any potential legal issues associated with it. However, if you are not careful, a title defect could throw a wrench into your real estate transaction and cause any number of serious legal problems. But what exactly is a title defect, and what happens if you try to buy or sell a property that has one?
What is a Title Defect?
In simple terms, a title defect is a type of legal problem that impairs the property rights of its legal owner or owners. In other words, if a property has a title defect, that means the owner does not have complete ownership of the property. This is known as having “unmarketable title,” essentially meaning that the property cannot be sold in its current state.
What Does a Title Defect Look Like?
There are many ways a property might have a title defect. These include, but are not limited to:
- Property has an unpaid mortgage or lien against it
- Prior mortgage was paid off, but lender failed to file a notice of satisfaction
- Owner has unpaid property taxes
- Property has undisclosed easements or covenants
- Former owner has undisclosed heirs
- Public records have errors that need to be corrected
- Dispute over the property’s boundaries or survey results
- Important documents are found to be forged or fraudulent
What Happens if You Have a Title Defect?
If a property you are trying to buy or sell has a known title defect, the sale cannot generally move forward until it is corrected. In some cases, this may mean needing to spend weeks or months going through the often costly legal process to cure whatever defect was discovered. If the defect is severe enough, it can prevent the sale from occurring entirely, sabotaging the transaction.
What Should You Do?
If you are trying to buy or sell real estate, one of the most important things you can do to protect yourself is to perform a title search, which should reveal most potential title defects. You can also obtain title insurance to protect against liability in the event that a defect is discovered later on. However, the best way you can protect yourself is to hire a real estate lawyer with experience handling title issues. They can advise you on your best course of action, and help you to resolve any problems that may arise.
At David J. Lorber & Associates, PLLC, we assist clients throughout New York who are looking to buy or sell real estate. We will guide you through the process and help you minimize your legal and financial risks. Call us at (631) 750-0900 or contact us online to schedule your Free consultation at our Setauket office.
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