Quick Answer
Many issues can prevent clear title, including unresolved mortgages, tax liens, judgments, mechanic's liens, probate complications, ownership disputes, incorrect deeds, missing signatures, legal description problems, and recording mistakes. Most of these can be resolved before closing.
Clear title is essential for a real estate transaction to close. Here are the most common issues that can prevent a property from having clear title.
15 Categories of Title Problems
- Unreleased mortgages: Old mortgages that were paid off but never formally released from the public record. This is one of the most common title issues.
- Tax liens: Unpaid federal, state, or local taxes that create a lien against the property.
- Judgments: Court judgments against the current or prior owners that attach to the property.
- Mechanic's liens: Liens filed by contractors or suppliers who were not paid for work on the property.
- Probate issues: A prior owner's estate was not properly probated, leaving the chain of title incomplete.
- Ownership disputes: Someone claims an ownership interest through inheritance, divorce, or other means.
- Incorrect deeds: Deeds with errors in names, legal descriptions, or signatures.
- Missing signatures: Documents in the chain of title that lack required signatures (such as a spouse's signature).
- Legal description errors: The legal description in a deed does not match the property's actual boundaries.
- Recording mistakes: Documents recorded in the wrong county or missing from the public record.
- Forged documents: Fraudulent deeds or other documents in the chain of title.
- Undisclosed easements: Easements not disclosed in the purchase contract that affect the property's use.
- Restrictive covenants: CC&Rs that limit how the property can be used.
- Bankruptcy filings: A current or prior owner's bankruptcy may create claims against the property.
- Divorce decrees: A former spouse may have an unreleased interest in the property from an incomplete divorce settlement.
Does Every Problem Kill the Deal?
No. Most title problems can be resolved before closing. The key is identifying them early and working with an experienced title company to address them. Some issues take more time than others, which is why it is important to start the title process as early as possible. Learn what happens when a title search finds a problem for the resolution process.
Property Research Before the Transaction
Want to research a property before you commit to buying? 1st Option Title offers free Property DNA Reports that provide comprehensive information about a property's recorded history, including liens, judgments, ownership information, and potential issues. A Property DNA Report is an informational research resource only. It is not a title search, a title commitment, title insurance, or a legal opinion. It is designed to help you make informed decisions early in your property research. Always consult qualified professionals for formal title services and legal advice.
Key Takeaway
Many things can prevent clear title, from unpaid liens to recording errors. Fortunately, most issues can be resolved before closing. Early identification through title search or property research gives you time to address problems without delaying your transaction.
FAQs
Which is the most common title problem?
Unreleased mortgages are one of the most common issues found in title searches. A mortgage was paid off years ago, but the release was never recorded, so it still appears as an active encumbrance on the public record. These are usually easy to resolve once the lien holder provides a release.
Can a cash buyer close on a property without clear title?
Technically, a cash buyer can agree to purchase a property without clear title, but it is not recommended. Doing so means accepting whatever title defects exist and dealing with them personally after closing. Most cash buyers still insist on clear title and title insurance.