Buying property at any stage of life is a very big deal. Like any major investment, buying property comes with a fair possibility of complications between finding your dream home and move-in day. Being familiar with the closing process is helpful, but having a closing attorney on your side of the table is like giving yourself the ultimate housewarming gift.
Any real estate attorney will tell you – finding your forever home is only one of the first steps in a very complex but worthwhile journey. The next steps involve a lot of paperwork, fine print, and details that most people brush by with little understanding or regard for the consequences. Your Real Estate Attorney has one job – to get your title clear to close as timely and painlessly as possible.
What is a Clear Title?
A clear title removes any doubt that the property being purchased has a clear, legal owner. Also, it confirms the property is without encumbrances that could prevent the property from being sold. A property with a clean title is free from liens or additional issues that complicate ownership, such as boundary or chain of title issues. Without a clear title, the validity of a property sale can be disputed.
The terms “clear title” and “clean title” are often used interchangeably. In a property transaction, a seller is responsible for producing a clear title which also proves ownership. How hard is it to produce a clear title? Well, that depends on the results of the title search.
Common Title Defects
Forged or incorrect deeds
Incomplete divorce or unrecorded final orders
Tax liens
Ongoing probates or unrecorded orders
Mechanic’s liens
Zoning violations
What is a title search?
A title search is an examination of the public records pertaining to a specific property. The search examines its history for legal ownership and any claims or liens on the property. Depending on how old the house is, how many times it has been sold, or any breaks in the chain of title, the title search can take between 7 and 10 business days to complete. A Real Estate Attorney can carefully review the title search report and help resolve any potential obstacles on your path to a successful closing.
7 Sections of a Title Search Report
Apparent title vesting
Legal description of real property
Muniments of title (documents of record)
Mortgages, assignments, and modifications
Other property liens and other encumbrances
Restrictions/easements
Tax information
Hiring a Florida Real Estate Attorney is the best way to be sure you are protected. If a defect is discovered, a property lawyer can provide advice on how to resolve the issue. They can also help you move forward once you understand the risks. Don’t enter into a bad investment because you didn’t know your legal options – keep your Real Estate lawyer on speed dial.
What is a Lien?
If the house you want to purchase has a lien on it, that means someone who owned the property didn’t pay a debt. A creditor or legal judgment can establish a lien against a property until the debt is satisfied. If you purchase the property with existing liens, even unknowingly, you can become responsible for payment to satisfy the debts.
Examples of Liens
Outstanding property tax bills
Mortgage loans
Court ordered judgments
Mechanic’s liens
What is an Encumbrance?
An encumbrance on your property means your rights to the property are limited or restricted in some way. These could impact the transferability or use of your property and, if you weren’t aware prior to closing, you may inherit those limitations in your purchase.
Examples of Encumbrances
Utility right of way
Easements
Homeowners’ Association Restrictions
Why is it Important to Have a Clear Title?
Buying a house without a clear title could have big financial consequences. A clear title is important because it ensures your right to own the property. This is vital if you ever want to sell it in the future or pass ownership of your home down to future generations through an estate plan. Additionally, any liens or encumbrances on the property become yours to cure (or fix) which, depending on the issues, could be very costly.
Protection against title liens is one of the biggest benefits of title insurance. For an owner’s policy, the insurance lasts as long as you own the property. For a lender’s policy, the insurance lasts as long as there is an outstanding loan on the property. Buying a house without a clear title is a risk you want to avoid as you may find yourself drowning in claims and time in court.
What is Title Insurance?
Title insurance protects the buyer from losses that arise from hidden defects. If a lien or judgment against the property was not discovered in the title search, title insurance will cover the cost to defend your title. This covers lawsuits that may arise from defects covered in the policy that occurred prior to your taking ownership of the property. Title insurance does not cover any defects that occur after you take the title.
Can You Buy a Home Without a Clear Title?
If a property is not thoroughly researched and cleared of all defects before closing, all parties in the transaction are at risk. The greatest risk, however, lies with the buyer. In Florida, property cannot sell without a clear title. If you are searching for the perfect Florida real estate in Melbourne, retain a small law firm with attorneys specializing in real estate to protect your interests. These experts can help identify the defects and work on a plan to keep you on track with your purchase – or extricate you from the bad deal at hand.
Buying property can be one of the greatest financial investments you make in your lifetime. Why go in alone when you can have a team of property lawyers available to protect your interests? Saving time is also a good investment, so invest in yourself and have the best real estate lawyer near you on your team.
The only pathway to property ownership is through a clear title, and that’s why Florida Real Estate Lawyers are a Resource We Love. Learn more about their attention to detail and specialized skillsets in the Legal and Financial Section of our Blog.