4 title defects that may stall your real estate purchase

by | Jan 28, 2021 | Real Estate Ligiation

Most California home buyers inspect a home carefully, looking for flaws and defects before they make a decision about whether to buy it. They may walk through several times, take pictures and hire real estate inspectors to ensure there will be no surprises down the line. Unfortunately, some properties have problems a home inspector cannot find, such as title defects.

Title defects often show up during a title search, so it is important that home buyers not wait until too late in the process to run such a search. If there is a defect, or “cloud,” on a title, it may be a simple fix, or it may require many months to correct. In some cases, fixing a title defect may cost more money than a buyer is willing to spend, and many buyers simply walk away from such properties. Common title defects include the following:

  • Liens related to debts of the previous owners, such as tax liens, mechanic’s liens or court-imposed creditor liens
  • Clerical errors, such as misfiled documents, names omitted from the deed or inaccurate property descriptions
  • Ownership disputes, such as those that occur when a missing heir reappears, homeowners divorce or neighbors disagree about the property boundaries
  • Fraud, wrongful title transfers and other illegal incidents

In some cases, the real estate transaction cannot legally proceed until the title defects are cured. On the other hand, a title cloud may provide the buyer with some leverage. However, many clouds involve complex legal issues that may be more difficult to resolve without the assistance of an attorney.

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