Title Issues for the Seller
Your buyer wants clear title to your home at closing. That means she wants to own the property without inheriting problems of your making or left over from any previous owner’s dysfunctional life.
As the seller, you pay for a preliminary title search that will tell you whether there are any problems that need to be cleared up before title insurance is issued and the deal closed. It’s a little like checking your credit report, except in this case, you have a specialist doing the work and sending you a report. That specialist checks public land records back as far as 50 years looking for any problems.
Study the preliminary report. You can bet your buyer is studying it. And if you are to close this sale on time — which probably is the only way you can close on the purchase of your next house — you need to see that any clouds on the title blow away.
What sort of problems? Some of the most common clouds to pop over the horizon are related to tax liens and judgments, deeds that are found and filed years later, incomplete wills, and confused identity. Of course plain old human error can be discovered, too.
Some Common Title Problems and Solutions
More than one owner
If you are not the sole owner of the property you are trying to sell and your partner, or partners, are out of town, you can’t close without either getting their signatures on the closing documents or getting a power of attorney that allows you to be the sole signer.
Liens for back taxes and unpaid bills
Maybe you eventually paid the taxes, but it doesn’t show on the record. Talk to your closing agent who can help you clear up the situation. If you haven’t yet paid, the debt will have to be paid at closing.
But what about that contractor whose last invoice you refused to pay because you think he did a shoddy remodel of your bathroom? Did you know he placed a lien against your title? The solution here could be to pay up when you receive your sale proceeds, but first you’ll probably have to have a document in your file that says the contractor will release you from the lien. Pursue any other solutions asap if you want to close on time.
A mystery owner
Occasionally an unknown heir comes forward. Maybe his parents died without a will or maybe he found an unrecorded deed in a closet after a parent died and took it to the courthouse years after the death. If he has a legitimate claim to ownership, the situation must be resolved.
With any luck at all, you were a well-informed buyer when you first purchased your home. You bought an owner’s title insurance policy in addition to the one your lender required. That policy means the insurance company will defend your title. The insurer will negotiate with the stranger in town and pay whatever legal fees and judgments are necessary.
A judgment is placed against your property by the attorney for a homeowner’s association who confuses you with a resident of similar name who never paid his monthly condo dues. A sworn statement of identity from you should assure the title company that you are not the person in arrears.
Remember: Study that preliminary title report and clear up any problems pronto. To do nothing could squelch your sale.
The mortgage you had three refinances ago still shows up as a lien on the title. It will take some time and effort to work with that lender to clear the title from the loan that was paid off years ago.
Next article: The Seller's Closing Documents
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