5 Common Title Issues That Can Delay Your Closing

Buying a home is exciting! You’ve found the one, your offer was accepted, and closing day is on the calendar.

Then you hear the words: “There’s an issue with the title.”

It can be a little unsettling, but title issues are more common than you might think. That’s one of the reasons a title search is such an important part of the home-buying process. A title search looks at the history of a property to make sure the person selling it has the right to do so and that there aren’t outstanding issues that could cause problems for the new owner.

Here are five common title issues that can come up and why they matter!

1. Unpaid Liens

A lien is essentially a claim against a property because someone is owed money. Liens can come from several places, including unpaid contractor bills, judgments, or other debts connected to the property. In some cases, the homeowner may not even realize a lien exists. For example, imagine a homeowner had major work done on the house but a contractor was never fully paid. That unpaid amount could potentially result in a lien being placed on the property.

Why does that matter to a buyer? Because a title search may uncover the lien before closing, giving the appropriate parties a chance to address it. The goal is to resolve the issue so the buyer doesn't unknowingly inherit a problem tied to the property.

2. Tax Issues

Property taxes are another common source of title problems.

If property taxes haven't been paid, there may be outstanding taxes or tax-related claims associated with the property. Sometimes these issues are simple to resolve. Other times, they can require additional research or documentation.

Tax records can also reveal discrepancies that need to be addressed before a transaction can move forward.

The good news? Finding a tax issue during the title process allows everyone to get it sorted out before the buyer becomes the new owner.

That's exactly why identifying these issues early matters!

3. Ownership Errors

Sometimes, the biggest question is: Who actually owns the property?

Ownership can become complicated over time. A property may have been passed down through generations, transferred after a divorce, affected by an estate, or recorded incorrectly during a previous transaction.

There can also be situations where a previous owner was left off a deed or where the names on property records don't match the information in other documents. These issues may need to be corrected before a property can be transferred to the new owner.

It might sound complicated, but that's where a thorough title search can make a big difference. It helps uncover potential ownership questions so they can be addressed before closing.

4. Legal Description Errors

Every property has a legal description that identifies the property being transferred. It may sound like a small detail, but accuracy matters.

A legal description could contain an error from a previous deed, or information may not match correctly from one document to another. In some cases, the property's legal description may need to be reviewed and corrected before the transaction can move forward.

Think of it this way: You want to make sure everyone agrees on exactly which property is being transferred.

A title professional helps identify discrepancies and determine what needs to happen to correct them.

5. Recording Errors

Real estate involves a lot of paperwork, and a lot of that paperwork gets recorded with the appropriate government office.

Occasionally, something may have been recorded incorrectly, incompletely, or with the wrong information. Maybe a previous deed wasn't recorded properly. Maybe a document contains an error. Or perhaps information from one recording doesn't line up with another document in the property's history. These mistakes can create questions about the property's ownership or the rights associated with it.

Again, the earlier an issue is discovered, the better.

Why Title Searches Matter

Here's the important takeaway: Title issues aren't necessarily a reason to panic! They are a reason to have the title reviewed carefully.

A title search is designed to uncover potential problems before the property changes hands. When an issue is found, the appropriate professionals can work to determine what needs to be done to resolve it. That process can take time, which is why starting the title process early can help keep a transaction moving toward closing.

For buyers, it's another layer of protection.

For sellers, resolving title issues before closing can help prevent unexpected surprises.

And for real estate professionals, identifying potential problems early can make for a much smoother transaction.

What Happens If a Title Issue Is Found?

The next steps depend on the type of issue and the circumstances surrounding it. Some issues may be resolved with documentation or a correction to the public record. Others may require additional research or action from the seller, an attorney, a lender, or another party involved in the transaction.

The important thing is not to ignore the issue. Your title team can help identify what needs attention and work with the appropriate parties to get things moving in the right direction.

A Smooth Closing Starts With a Clear Title

Most people don't think about the history of a property once they've fallen in love with the house, and that's completely understandable. But before the keys change hands, it's important to make sure the property's title is in order.

Unpaid liens, tax issues, ownership errors, legal description errors, and recording mistakes are just a few of the things that can come up during the title process. Catching those issues early can help prevent bigger headaches later.

At Celebration Title, we're here to help make the title process easier to understand from contract to closing. Have questions about a title issue or your upcoming closing? Reach out to our team - we're happy to help!

FAQs About Title Issues

How common are title issues?

Title issues aren't unusual. Properties can have complicated histories, and even small errors from years ago can sometimes surface during a title search.

Can a title issue delay closing?

Yes. Some title issues can take additional time to resolve, which is why identifying them as early as possible is so important.

Who is responsible for fixing a title issue?

It depends on the issue. The appropriate party may vary based on what caused the problem and the circumstances of the transaction.

Can title issues be prevented?

Not every title issue can be prevented, especially when it involves something that happened years ago. However, a thorough title search can help identify potential problems before closing.

Why should buyers care about title insurance?

Title insurance can provide protection against certain covered title problems that may arise after closing. Your title professional can explain what coverage is available and what it means for your specific transaction.