How Selling Your Home is Affected by Title Defects
When you decide to sell your home, there are many factors to consider. One of the most critical aspects that can influence the sale is the state of your home's title; any potential sale can fail because of defects in the seller's title. The title is the legal document that establishes the rights to ownership of the property. However, a problem or "defect" on the title can cause significant complications during the sale process, so any real estate agent should do a preliminary search detailed enough to identify any potential title defects before marketing the property. This article will explore how title defects can impact the sale of your home and what steps you can take to resolve these issues.
Understanding Title Defects
Title defects are issues with the title to a property that can affect the transfer of ownership rights. These defects can include old mortgages, missing deeds in the chain of title, and liens or other encumbrances. These issues create a cloud on the title, making it less clear who has the right to sell the property, which can lead to delays or even halt a property sale.
Usually, sellers don't order a title search on the property until after they've accepted an offer to sell. A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the seller's right to transfer ownership, and to discover any claims, defects and other rights or burdens on the property.
What to Do When You Encounter Title Defects as a Seller
1. Contact an Attorney: As soon as you discover a title defect, it's important to consult with an attorney. Provide them with all documents from the title company, the purchase agreement and accompanying documents/addendums, and the deed or land contract which gave you title. Any pending sale is likely to fail if title defects are found, making preliminary title searches even more important. Real estate agents should do a preliminary title search confirming clear title before marketing the property.
2. Addressing Common Title Defects: Depending on the nature of the defect, your attorney will determine the appropriate steps to rectify the situation.
(A) Missing Deeds in the Chain of Title: This often means that the seller didn't receive and record a deed confirming their ownership. Sometimes it's a mistake by a title company, or it could be because a previous land contract seller never recorded a deed in fulfillment of the contract. The solution can be as simple as contacting the previous owners and obtaining a newly executed deed. Another solution is a quiet title case, where the court confirms the ownership of the property (see Quiet Title Cases).
(B) Mortgages, Liens and Encumbrances: To extinguish old mortgages and liens, you can obtain a discharge by providing proof of payment, if the mortgagee or lien holder still exists. If the mortgagee or lien holder no longer exists or cannot be located, a quiet title case might be necessary to clear title.
3. Record the Resolution: Whether it's a judgment quieting title or a newly acquired deed/discharge, it's essential to record this with the county register of deeds. If a quiet title case was necessary, your attorney will obtain a certified order quieting title from the court and record it. Once the proper instrument is recorded, the title is clear, and the sale can proceed.
The Importance of Clear Title
The title has to be clear to complete the sale of a property, which is why preliminary title searches are so crucial to the sale process. This means that there are no outstanding liens or other encumbrances that could hinder the transaction. Having a clear title ensures that the buyer can take possession of the property without any issues or potential legal claims.
If you encounter a title defect during your home sale, it's crucial to take swift action. By consulting with a legal professional, you can navigate the complexities of title defects and work towards a resolution and the sale of your home.
If you are based in Michigan and are facing a title defect issue, Wood Kull, Michigan's premier quiet title law firm, is a solid resource for addressing these concerns. The attorneys at Wood Kull are experienced in handling a variety of title issues and can guide you through the process of clearing your title, allowing you to proceed with the sale of your property.
Selling your home can be a complex process, and title defects can add an additional layer of complexity. However, with the right knowledge and professional guidance, it is possible to resolve these issues. Understanding title defects, how they can affect your home sale, and knowing the steps to take when you encounter them can help make your home-selling experience smoother and more efficient.
Remember, a clear, defect-free title is a key element in ensuring the successful sale of your property. So, preliminary title searches should be performed before th property is marketed. But if you encounter a title defect during your sale, take immediate action by contacting a reputable and experienced attorney. You've worked hard for your home, and you deserve to see that hard work pay off.