Introduction - Real Estate Due Diligence
Mistakes in a title search can lead to legal disputes, unexpected financial liabilities, and even lost property rights. A missed lien, an undiscovered heir, or a recording error can all create problems down the road.
Understanding the most common title search mistakes and how to prevent them helps buyers, sellers, and investors avoid costly setbacks.
This article from your trusted Title Search Company - Title Search Direct - discusses the most common real estate due diligence mistakes involving title searches. For a quick reference, use the key takeaways and table below!
Key Takeaways
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Check public records thoroughly to catch outstanding liens or ownership disputes.
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Verify legal descriptions to prevent boundary issues.
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Review documents for accuracy to avoid fraud and clerical errors.
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Investigate the property's chain of title to uncover illegal deeds or unresolved claims.
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Consult with professionals when dealing with complex title issues.
Common Title Search Mistakes and How to Avoid Them
Overlooking Existing Liens and Encumbrances
Liens and encumbrances can become expensive surprises if missed during a title search.
Unpaid property taxes, mortgage balances, and court-ordered judgments can remain attached to a property, transferring the financial burden to the new owner.
A thorough public records check is the best way to catch these issues before closing.
Ignoring Errors in Public Records
Mistakes in public records happen more often than people think.
Something as small as a misspelled name or an incorrect legal description can create major roadblocks in transferring ownership. These errors may lead to disputes, delays, or even failed transactions.
The best way to avoid this problem is to carefully review all property documents, including deeds, surveys, and previous title reports.
Checking for consistency across multiple sources can help catch discrepancies early. If an issue arises, working with a title professional can help correct it before it affects the sale.
Failing to Identify Unknown Heirs or Missing Wills
Properties with a history of inheritance can have unexpected ownership disputes.
If a deceased owner’s estate wasn’t properly settled, long-lost heirs could later surface to claim their rights. Even if a will exists, mistakes in execution can leave room for legal challenges.
Steps to Prevent Issues with Unknown Heirs:
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Research the property’s ownership history to identify past transfers.
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Review probate records for any unresolved inheritance claims.
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Obtain affidavits of heirship if formal documentation is missing.
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Work with a title professional to confirm that all heirs have been properly accounted for.
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Purchase title insurance to protect against future claims.
Overlooking Easements and Restrictions
Easements grant others the right to use a portion of a property - often for utilities, access roads, or shared spaces. Failing to account for existing easements can lead to surprises, such as a utility company accessing part of the land without permission.
Property owners might not have full control over certain areas if an easement is already in place.
Restrictive covenants are another issue that can impact a property's use. These legal limitations, often set by homeowners' associations or developers, dictate how a property can be used or modified.
Reviewing all recorded documents before closing helps uncover any easements or restrictions that could affect property value or intended use.
Neglecting to Verify the Chain of Title
A clear chain of title confirms legal ownership and protects against future disputes.
Legal challenges could arise if previous transfers were not recorded correctly or if ownership was contested. A thorough title search helps identify gaps, errors, or potential claims before they become a problem.
Importance of a Clear Chain of Title
A continuous and undisputed record of ownership prevents legal complications and ensures the property’s title can be legally transferred. Any breaks or inconsistencies in ownership records can cause delays or, in worst cases, make the property unmarketable.
Common Issues in the Chain of Title
Ownership disputes often stem from clerical errors, undisclosed heirs, or fraudulent transfers.
Missing or incorrect signatures on past deeds, illegal conveyances, or unresolved ownership claims can all disrupt a clean title. Catching these issues early can prevent future legal entanglements.
Steps to Verify the Chain of Title
Reviewing all previous deeds and ownership records is essential for confirming an unbroken transfer of ownership. Checking probate records, verifying past transactions, and consulting with a title professional can help identify and resolve any inconsistencies.
Final Thoughts: Avoiding Common Mistakes When Buying a Property
A thorough title search protects buyers from legal headaches and financial losses. Overlooking key issues—such as undisclosed liens, public record errors, missing heirs, easements, and gaps in the chain of title—can lead to costly complications. Addressing these risks early allows buyers and investors to avoid surprises that could threaten their real estate transactions.
Title Search Direct is your dedicated resource for accurate and organized property title reports in 48 states.
Decades of experience with a commitment to customer service and transparent pricing have earned our reputation as a trusted title search company. Look us up today and protect your investment!
