Title Defects

Definition

Title defects are legal issues or claims that cloud a property’s title, preventing the seller from transferring clear, marketable ownership. These defects can arise from unpaid obligations, errors in public records, undisclosed parties, or fraudulent documents.

Common Examples

• Liens: Outstanding debts such as contractor liens or unpaid taxes (lien).
• Unpaid taxes: Tax liens that must be settled before closing.
• Easements: Rights granted to third parties—like utility companies—for use of the land (easement).
• Boundary errors: Survey discrepancies or record mistakes affecting lot lines.
• Unknown heirs: Previously unacknowledged heirs emerging with ownership claims.
• Forgery or fraud: Invalid signatures or forged deeds in ownership history.
• Public record errors: Incorrect descriptions or filing mistakes in deeds.

Real-World Scenarios

• A buyer discovers after closing that a utility easement runs through the backyard, limiting construction plans.
• During refinancing, a hidden contractor’s lien surfaces, requiring payoff before new financing.
• Two neighbors dispute a fence location due to a flawed survey, halting the sale until resolved.
• An unknown heir appears years later, challenging the deed and demanding compensation.
• Forgery of a signature in the chain of title triggers costly litigation to validate ownership.

Resolving Title Defects

Sellers must deliver a marketable title and typically cure known defects when notified by the buyer. Buyers conduct a thorough title search to identify issues in advance and negotiate remedies or credits. Common resolutions include paying off liens, obtaining corrective affidavits, clarifying easement rights, or initiating quiet title actions to clear disputes.

Role of Title Insurance

Title insurance protects buyers (and lenders) against losses from covered defects that may surface post-closing. Policies typically cover forged documents, undisclosed heirs, missing signatures, liens and encumbrances. If a covered claim arises, the insurer provides legal defense and financial reimbursement, safeguarding the buyer’s ownership rights.

Summary

Title defects are real-estate claims or errors that hamper the transfer of clear ownership. Identifying and curing these defects—through title searches, seller resolutions and title insurance—is essential to avoid transaction delays, legal battles and financial loss.