An unclear property title represents a dreaded scenario for many homebuyers, and for good reason. Just imagine: you’re trying to stay on schedule while preparing for closing and the title search reveals a problem. It could be a pending debt or a suspicious claim that could lead to ownership disputes later on. The point is that suddenly the closing date is in question, and you have a host of new things to deal with without knowing where to start.
It all sounds very daunting, but the truth is that the most common title problems have very straightforward solutions, especially when you already have a reliable title company on board.
A title search involves the examination of a property’s public records— every deed, lien, judgment, mortgage, and encumbrance ever recorded against it. It’s meant to verify the title’s legitimacy and the seller’s legal right to transfer the property to the buyer.
Going back approximately 30 years in the state of Florida, title searches are a crucial part of the closing process, so most buyers understand the basics when going into the process. With that said, the purpose of a title search can also be misread if you’re not clear on the distinction between that and title insurance.
To be clear, the title search identifies issues that exist in public records so they can be addressed in advance. Title insurance is meant to protect against elements that remained uncovered after the search, like hidden heirs or certain instances of fraud. Fraudulent practices are constantly evolving, which is why insurance is such an important step to take before completing a title transfer.
We’ve defined the goal of a title search, but what happens after the search is complete and a problem has been found? Let’s start by identifying the most common issues you can find in a Florida real estate closing:
Florida boasts a large retiree population, and many of these residents have become the main target of deed fraud. It also makes probate issues particularly common statewide, with relatives issuing affidavits of heirship to establish rightful ownership when there’s room for dispute.
Forged title transfers have resulted in big financial losses. Basically, you won’t be deemed the property’s rightful owner once it’s proven that the chain of title has a forged deed. And if someone impersonates the property owner during your own purchase transaction, you can expect a similar outcome.
While this is a long list, knowing how to address each of these issues will save you a lot of stress. This way, no time will be wasted after you’ve identified the specific problem affecting your title.
Depending on what you’re dealing with, you might be able to get a solution without having to change the closing date. Some problems, however, might result in delays since they involve more paperwork and/or a legal process to get through. The title company can tell you which problem you’re dealing with so you have an accurate timeline from the start.
Likewise, a Florida title company can harness years of experience to navigate negotiations with sellers, lienholders, and attorneys to resolve issues pertaining to pending judgement or debt.
The escrow agreement will come in handy since it specifies all the requirements that need completion before the closing can take place. If, for instance, the seller hasn’t paid a contractor fee, these payments must be transferred after the title search and before closing, as stated in the contract.
Now, other payments or judgements might be a bit harder to address.
HOA/Condo liens: Rising insurance costs and a statewide financial crisis have caused housing fees to skyrocket and, according to recent reports, a significant surge in HOA and COA lien activity, with major metros seeing increases over 50%. Depending on the amount, sellers might be unable to cross a debt before the closing deadline. Negotiations can cause delays and even a legal process.
Outstanding mortgages: To eliminate this lien, the seller must track down the lender and obtain a satisfaction of the remaining unpaid balance.
Judgments: These are usually resolved through negotiated payoffs or subordination agreements. It’s one of the areas where you can save time if you get an attorney involved in the process from the start.
Outside of liens, this is how other common issues are addressed:
Recording errors: Whether it’s a misspelled name or missing signatures, you can work with your title company to file a corrective deed with the county.
Probate gaps: These are usually addressed with a quiet title action. This refers to a lawsuit that asks the court to address the competing claims with a settlement. It generally takes longer but it’s a surefire way to legally clear your ownership rights.
Fraud: Most title insurance policies cover fraud and forgery in prior conveyances. Of course, you still need to review these policies if you’re a buyer since they can always vary depending on the carrier.
As you can see, some of these issues can be resolved soon after getting in touch with the authorities involved, while others require further evaluation. Cases where the problem can’t be solved before the closing date are rare, but here’s what you can do.
For one, sellers and buyers can re-negotiate a new contract, reaching an agreement to prevent financial loss. This usually leads to a closing extension, but you can still make a successful purchase even if the process takes longer than the customary period of 30-45 days.
And if finding an issue in the title makes you wary of the property as a whole, remember that title insurance is tailored to cover unknown or hidden defects that emerge after the transfer is complete.
You Can Trust Key Title & Escrow If you’re planning a Florida closing, you can’t underestimate the benefits of having an experienced escrow company on your side. Key Title & Escrow has over 24 years of experience assisting buyers, sellers, and real estate agents with all parts of the closing process.
Because of this, we have plenty of experience identifying title problems and helping clients reach a quick solution. We conduct thorough Property Title Searches, using the latest technical resources to ensure that nothing is overlooked. You can count on our expertise navigating pending liens, probate gaps, recording errors, and other common problems in the South Florida closing market. We also identified the instances that might require a closing delay so you don’t get any last-minute surprises.
Likewise, you can count on us to point you toward the best options for Florida Title Insurance while helping you navigate the intricacies of the local housing market. When issues are found, Key Title works proactively to resolve them — not just flag them.
Contact us today to learn more about the right way to address different title issues. We’ll be happy to answer all your questions about Judgment & Lien searches, public property records, title insurance, and more!
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