If you are considering buying a home, we cannot overstress the importance of doing your homework and making sure your future home has a clear and free title. Clarity in home purchase transactions ensures peace of mind and security. A clear title means the property’s ownership is free from legal questions or disputes. Some technical objections, like certain covenants and conditions like an HOA, are generally acceptable to most would-be homebuyers. We’ll help you understand what any objection means and what could happen if you encounter a title with objections.
What is a Title in Real Estate?
First, let’s understand what a title is and is not. The title is a legal concept that is an opinion concerning rights of ownership. It is not a physical document, but rather a collection of rights that dictates who owns the property and what they can do with it. The term “clear title” refers to a title that is free of any legal encumbrances, liens, objections, disputes, or other claims that could affect the property. While a “title” and a “deed” are often used interchangeably, they are different! A deed is a document that transfers ownership of the property from one party to another. Title is the concept of legal ownership itself.
Why is a Clear Title Important?
Clear title is important for both buyers and sellers. For buyers, it ensures that you are purchasing property without any legal issues. No one wants that! For sellers, having a clear title means that the sale process will be smooth and with few chances for delay. Clear title is also crucial for lenders because it means they have first priority in the property as collateral for their loan. If a title is not clear, the buyer could face significant legal challenges in the future. We’ll go over some of the most common issues found on titles.
Common Title Issues in Real Estate Transactions
Liens – These are legal claims on the property, typically from a creditor, judgment creditor, or lender that gives them rights to the assets of the owner.
Ownership Disputes – It’s not uncommon for there to be errors in public records, such as incorrect
names or property descriptions, or claims from undisclosed heirs. This can lead to disputes over who actually owns the property.
Encumbrance – This is when someone other than the current title holder makes a claim on the property. This is why a closing attorney conducts a thorough title search.
How to Make Sure Your Title is Clear
Georgia Title Standards mandate a search of property records that goes back fifty years! The title search will expose any legal issues. Most title issues can be cured through corrective work by an experienced professional. An essential way to protect yourself is to purchase title insurance. By purchasing owner’s title insurance, you are protected from unseen disputes that can arise after you purchase a property. Learn more about title insurance here.
If you want peace of mind on your next real estate closing, feel free to reach out to us. We are
here to help you and your family!