Understanding Title Clouds and Defects
If you are considering selling your home, you may want to strongly consider having your title examined before putting up the “FOR SALE” sign in your front yard. Title clouds, also called title defects, affect more than 45% of home sales, according to the National Association of Realtors.
Of that 45%, half of the defects are considered serious and complicated to repair. Your best course of action is to hire a real estate attorney who has experience working with titles. A real estate attorney will work with a title company to review your existing title and determine if there are any issues that may arise when you go to sell.
Title defects can cause long delays in the closing process or even scare off your prospective buyers altogether. You may be thinking that you don’t need to clear your title first, because you bought that title insurance policy when you bought your home. In fact, homeowners policies only cover up to the point of your purchase. But what could happen after buying a home that would trigger a title cloud?
Unrecorded Mortgage Release – Occurs when the seller has paid off a mortgage, but the termination has not been recorded
Incorrectly Recorded Discharge – The seller has completed a mortgage payment but the discharge was incorrectly recorded
Missing Mortgage Assignments: record the transfer of a loan from one institution to another
missing writing
If you’ve ever refinanced your home or obtained a second mortgage, you should be especially wary of complications that can arise during a buyer’s title search.
If you didn’t this time, be sure to keep all documents related to your property purchase, including the original deed in case you sell it again. Having the proper documents can ensure that any flaws in a future title search are resolved quickly.
When selling your home, you will work with a real estate attorney at some point. It might be worth hiring them early in the game and having them clear your title before you start.
An attorney can guide you through the complications that can arise with a title, and typically has a title search company with whom they have a comfortable and effective relationship, which can help make the process faster and more No problem. Title clouds delay or even stop the sale of the house every year. Advance planning with your real estate attorney can ensure that your home purchase does not fall through and you do not miss out on your next home purchase due to the delay in selling your previous home.