All home-buyers should obtain title insurance when they purchase a new home. They should also use an experienced Florida real estate lawyer who can help address any title clouds that may arise. The last thing any buyer of a condo, townhouse, or single home wants is to have a legal headache. Without proper investigation and due diligence, a home-buyer may find that:
- Others claim they have a right to the home
- Creditors may seek to sell the home to pay their debts
- The homeowner can’t sell or transfer the home
Common Title Cloud Defects
Title insurance protects home-buyers from legal claims. The insurance company, on payment of a premium, agrees to pay when certain legal disputes arise. To limit legal claims, title companies usually investigate your property and the prior owners of the property. At settlement (or before settlement), they review any title clouds. They also normally have the home-buyer acknowledge that the buyer doesn’t know of any other clouds.
When clouds arise, your Sebastian or Vero Beach title cloud lawyer helps investigate and respond to adverse title issues.
Some of the standard issues lawyers and title companies review before settlement include:
Recording defects
It’s only been recent that electronics record real estate deeds, mortgages, and other documents. Most older documents were handwritten. Recording documents also means indexing the document. Indexing is a common way for searchers to trace your property since the home was built. Older recordings and indexes often contain errors or are unclear. An experienced title searcher understands how to search real estate records for the county where the property resides. The Indian River County Courthouse has information on recording deeds for properties in their county. Other Florida county courthouses have similar offices.
Liens and judgments
If a mortgage company has recorded the mortgage on the property, the title company will ask the lender to provide a mortgage satisfaction. If taxing authorities, contractors, utilities, or any entity has a lien – then steps must be taken to satisfy the debt and remove the lien. There should be a resolution of any judgments against the homeowner. Any possibility that someone may file a lien should be addressed
Death related issues
Unless the home was built recently, many of the prior owners are likely deceased. The records need to be checked to verify that the prior owner transferred his/her interest while alive or that proper estate documents were filed. If an Estate sells or transfers property, then probate deeds or estate-related deeds may need to be on the record. Otherwise, the heirs may need to release any ownership claims.
Foreclosures
If the property is obtained through a foreclosure proceeding, the title company and the new buyer need to be extra careful that all the legal formalities are met. Courts generally are extra-cautious about taking someone’s home away. They, therefore, provide the debtor with many legal protections. If the foreclosure is invalid, the new Florida homeowner may face a legal challenge from the prior owner. The homeowner and lawyer should also check for any open bankruptcies. Bankruptcies can act as a title cloud.
Additional title defect and concerns
Title clouds also include:
- Fraud. Deed, mortgage documents, or other written documents may have been forged or deliberately altered.
- Easement claims. Often, utilities and others may have the right to enter your property to make repairs or for other reasons. The title report should disclose all open easements.
- Invalid powers of attorney. The title company and homeowner should review any real estate documents made with a power of attorney. A power of attorney needs property authority and proper scope.
- Improperly described property. The legal description of the property should match what you’re actually buying.
- The rights of spouses. The title search should also inspect if any spouses acquired rights to the property. Some buyers purchase property while they are single and marry later. The married spouse, for example, may have a legal claim on the property if the original buyer dies.
A respected Florida title cloud lawyer will explain what title clouds the title company is protecting and which ones it is excluding.