Before making a significant investment and purchasing a property, the seller needs to review the title report for any potential issues. One must address these title impediments before closing on the property to ensure that the buyer gets a clear title.
Knowing what common title issues to look for in a title report and what they mean can help potential property sales go much smoother for both parties.
1. Unpaid property taxes
The title report should include the tax records for the property. When a homeowner does not pay taxes, the government puts a lien on the property as collateral for the tax debt. Buyers should learn of these unpaid property taxes as they either can become the new owner’s responsibility or the current owner needs to pay them before the sale goes through.
2. Open or missing permits
The title report must address the property’s permits, including any open or missing permits. Inaccurate or omitted permits may mean that the construction or renovations made to the property happened without proper authorization or did not follow code. This can pose a significant issue for potential property buyers.
3. Liens and judgments against the property
Lastly, judgments and liens against the property are other items to look for in a title report carefully. In addition to tax liens, another example is a mechanic’s lien which typically comes from unpaid work on the property. If the home has a mechanic’s lien, the seller cannot complete the sale until the contractor or supplier receives their outstanding payment.
Overall, addressing title defects promptly helps mitigate future financial and ownership issues of the property.