Common Home Title Problems and How to Fix Them

When you purchase property, the sale can’t be finalized until a title search is completed. Sometimes, that search of public records reveals issues that can hold up the transfer of title until they are resolved.

Home title problems also can come to light if you use a title monitoring service or have signed up for complimentary property alert notifications offered by your county deed recorder’s office. Those alerts can even be a red flag of deed fraud.

Here’s what to know about common home title problems, including deed fraud, and what steps you can take to deal with these issues.

Common home title problems

Liens

Liens on property are the most common issue impacting home titles, according to title insurance company First American. They can stem from a range of unpaid debts, such as mortgages and tax bills, and are attached to the property—not the person or entity that failed to make payments. So liens can create problems for new property owners if they aren’t resolved before a home title changes hands.

For example, first-time home buyers in Texas found themselves on the hook for a hidden lien on their property because the builder hadn’t paid the roofing subcontractor. The builder self-financed the transaction, eliminating the need for a title search. “There was no one to identify that the roofer filed a lien on the property.”

In some cases, a lingering lien can result from compliance errors. When a home is sold, a pay-off request for any existing mortgage on that home should be sent to the lender, and the lender should release the lien. The lien release must be recorded with the appropriate government agency and verified. “There are people who don’t do that,” resulting in unclear titles.

Deed errors

A deed is the document that shows ownership of property. Mistakes can occur when deeds are drafted, such as information that is listed incorrectly or left out altogether. And they can be invalid if they aren’t signed properly.

Public records errors

Deeds are typically recorded with a local county government office. Sometimes, the people filing deeds can make mistakes when entering information into the deed index, such as misspellings or mixing up names.

Missing owners

People with a right to property might not come forward to claim it until after a title is transferred, especially if property owners die without identifying all their heirs.

Unknown encumbrances

An encumbrance is a claim that a third party has on property that can restrict its use. It can be financial, such as a lien, or legal, such as a zoning law.

Boundary disputes

Title issues could arise if property boundaries are in dispute due to changes in land surveying methods or natural boundaries changing over time.

Fraud

A survey found that many respondents had seen title fraud or deed theft in their market. Criminals have been filing fake deeds and listing properties for sale unbeknownst to the actual owners.

If you use a home title monitoring service, you should be notified if there are changes to your title that could indicate fraud.

How to fix title problems

Any of the issues above can arise during a title search when you buy or sell a home and must be resolved for the home sale to be finalized. If you encounter issues, take these steps:

1. Check with the county recorder’s office to verify discrepancies in recorded information.
2. Call the real estate attorney who handled the closing for your property to ask for an investigation.
3. Call your title insurance company if you purchased an owner’s policy, as your coverage could help pay for resolving title discrepancies.
4. Contact local and state law enforcement if you believe you are a victim of deed fraud.

Becky Ross

Becky Ross is the Head of Marketing at Carefull, focusing on how financial services can protect older adults from fraud, scams, and money mistakes.