Common Home Title Mistakes and How to Fix Them

When you purchase property, the sale can’t be finalized until a title search is completed. Sometimes, that search of public records reveals issues that can hold up the transfer of title until they are resolved. 

Home title problems also can come to light if you use a title monitoring service or have signed up for complimentary property alert notifications offered by your county deed recorder’s office. Those alerts can even be a red flag of deed fraud.

Here’s what to know about common home title problems, including deed fraud, and what steps you can take to deal with these issues.

Common home title problems

Liens 

Liens on property are the most common issue impacting home titles, according to title insurance company First American. They can stem from a range of unpaid debts, such as mortgages and tax bills, and are attached to the property—not the person or entity that failed to make payments. So liens can create problems for new property owners if they aren’t resolved before a home title changes hands.

For example, first-time home buyers in Texas found themselves on the hook for a hidden lien on their property because the builder hadn’t paid the roofing subcontractor, says Jeremy Yohe, vice president of communications at American Land Title Association. The builder self-financed the transaction, eliminating the need for a title search. “There was no one to identify that the roofer filed a lien on the property,” Yohe says.

In some cases, a lingering lien can result from compliance errors. When a home is sold, a pay-off request for any existing mortgage on that home should be sent to the lender, and the lender should release the lien. The lien release must be recorded with the appropriate government agency and verified. “There are people who don’t do that,” says Nancy Maddox, a real estate attorney in Georgia. As a result, the title isn’t clear.

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Deed errors

A deed is the document that shows ownership of property. Mistakes can occur when deeds are drafted, such as information that is listed incorrectly or left out altogether. And they can be invalid if they aren’t signed properly. 

“Not all real estate attorneys are as careful as they should be,” Maddox says. “You will see very sloppy work out there. That’s what accounts for a lot of mistakes.” These mistakes can go undetected when deeds are filed because the clerks that file them aren’t verifying their accuracy, Maddox says.

Public records errors

Deeds are typically recorded with a local county government office, such as a clerk of court office. Sometimes, the people filing deeds can make mistakes when entering information into the deed index, Maddox says. 

For example, the name on a deed could be misspelled. The names of the buyers and sellers could be mixed up. The address of the property could be entered incorrectly. All sorts of human errors could lead to mistakes when deeds are recorded.

Missing owners

People with a right to property might not come forward to claim it until after a title is transferred. In particular, this can happen when property owners die and not all of their heirs are identified or notified about the property. 

For example, Maddox says there was an instance with two siblings who deeded their deceased sibling’s property to themselves, leaving out 23 other heirs. After dividing the property into several lots and selling them, one of the heirs found out—creating title issues for the new property owners.

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Unknown encumbrances

An encumbrance is a claim that a third party has to property that can restrict how the property is used—and can impact the title. It can be financial, such as a lien. It can be legal, such as a zoning law. An encumbrance also can be an easement, such as the right of a utility company to access utility lines on the property.

“As a buyer, you want to know what’s underground and what can do with land,” Yohe says. If an easement issue is discovered during a title search, it can be grounds for walking away from a home purchase. If an issue is discovered after a home purchase, title insurance held by homeowners can help pay to settle the issue.

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Boundary disputes

Title issues could arise if your property’s boundaries are in dispute. Because land surveying methods have changed over time, a new survey of your land might contradict borders established in the original survey. Plus, if any of your property borders were originally established by natural elements, such as a stream or river, Maddox says that those sorts of borders can change over time. 

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Fraud

“A lot of fraud is happening in the market now,” Yohe says. And it can impact your title. For example, criminals have been filing fake deeds and listing the properties for sale unbeknownst to the actual owners. Yohe says that a survey of ALTA members revealed that about a quarter of them have encountered seller impersonation fraud attempts.

If you use a home title monitoring service such as the one included with financial safety service Carefull, you should be notified if there are changes to your title that could indicate fraud. “If the owner’s name is John Doe and it’s changed to John Lynch, that’s a big red flag,” Yohe says. “You’d want to get that corrected.”

How to fix title problems

Any of the issues above can arise during a title search when you buy or sell a home and must be resolved for the home sale to be finalized. However, some of these issues could be flagged if you are using a home title monitoring service. In that case, take these steps to investigate the issue and resolve it.

Check with the county recorder’s office  to see if there is a discrepancy in what is recorded and what you’re seeing on a home title monitoring report. It could simply be an error on the home title monitoring service’s part. If not, you’ll likely need to get assistance with resolving the issue.

Call the real estate attorney who handled the closing for your property and ask them to investigate the issue. Maddox says reaching out to the closing attorney is the first step she takes when she discovers a title problem. Just make sure you give them a timeline for investigating the issue. “Let them know you’re going to follow up in one week,” Maddox says. 

Call your title insurance company if you purchased an owner’s policy. Your coverage could help pay for the cost of resolving the title discrepancy.

Contact local and state law enforcement if you believe that you are a victim of deed fraud. If you have enhanced title coverage, your policy might cover fraud that happens after the purchase of property, Maddox says.

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