A previously hidden lien, unresolved easement or even a surprise ownership claim can sometimes surface after you’ve closed the sale on your new home. Title defects can arise despite a diligent purchase process, risking your most precious investment.
Title issues emerge more often than most home buyers realize, making it necessary to understand that most title issues are preventable and solvable and that it’s possible to safeguard your property rights and investment through the appropriate information and tools.
Let’s discuss how you can do that.
What Are Title Defects?
Title defects – or clouds on title as they’re often called – are problems that question whether you rightfully own your property. You might discover an old lien where a previous owner didn’t pay a contractor. Maybe a recent survey indicates that your neighbor’s fence is on your property, or maybe an unknown heir claims they own part of your house. Other times, simple paperwork mistakes at the county recorder’s office ultimately end up causing big headaches.
These problems don’t always reveal themselves during the initial title search when you buy your home. They can pop up months or even years later when you least expect it. When they do surface, you can’t ignore them. Title defects can threaten your ownership rights and drop your property value overnight when left unaddressed.
How Does Title Insurance Protect You?
In our experience, title insurance proves worth it when you discover a title problem after closing. Most insurance policies you buy – like auto or home insurance – cover possible future occurrences. Title insurance works the other way around: It protects you against problems from the past that nobody noticed during the initial title search.
Your future-forward thinking of buying an owner’s title insurance policy (not just the lender’s policy your mortgage company required) covers you for as long as you own your home. The title insurance company has to argue for you in court if needed and pay you for covered losses if the problem can’t be corrected. They also cover legal fees and other costs related to resolving the issue. Without this protection, you could be on the hook for thousands of dollars in surprise expenses.
What Steps Should You Take When a Defect Is Discovered?
Discovering a title defect requires prompt action—here’s how to protect your property rights effectively:
- Contact your title insurance company immediately to report the issue and file a claim.
- Gather all relevant documentation, including closing papers and property surveys.
- Consider consulting with a real estate attorney specializing in title issues.
- Document all communications and expenses related to the defect.
Be sure to let professionals handle the negotiations rather than attempting DIY solutions. Finally, don’t forget to follow up regularly on your claim’s progress to ensure timely resolution. Taking these steps in time improves your chances of a favorable outcome while reducing the stress of dealing with title challenges.
Can All Title Defects Be Resolved After Closing?
The good news is that most title problems can be fixed, though how it happens depends on what you’re dealing with. For simple paperwork mistakes, a basic affidavit might do the trick. Your title company might negotiate a payoff or settlement to remove an old lien on your property.
You may require a new survey or even a day in court for boundary issues. When unknown heirs come forward, you will most likely have to go to court to determine who owns what. Fixing these can take anywhere from a few weeks to several years if it gets really complex. Your title insurance company is usually in charge of fixing this while you stay in your house during the process.
What Happens if the Defect Cannot Be Resolved?
Sometimes, title problems are irreparable. That’s when your title insurance pays off. If you lose money due to the situation, your policy should cover you up to your policy limit. You’ll generally receive the difference between what your property was worth without the problem and its current worth, plus they’ll pay your legal bills.
In worst-case scenarios, for example, someone else legally owns your property—the insurance company might pay out your entire policy amount. This protection keeps you from a substantial financial loss for something you could not know when you bought your home.
Why Working With Experienced Title Professionals Makes a Difference
Who you work with matters when it comes to title issues. Experienced title professionals like Cortes & Hay discover more problems upfront and know how to correct complicated situations. When issues surface after closing, we have the connections and know-how to resolve them quickly[SB1] .
Local title agencies offer even more benefits. We know the quirks of local property records and have relationships with county officials. This hometown advantage can make all the difference when your property rights are on the line.
How Can You Prevent Future Title Problems?
While you cannot eliminate all title defect risks, you can take steps to minimize future problems. These include investing in a comprehensive title search before purchasing the property as well as the following:
- Purchasing owner’s title insurance in addition to a lender-required policy.
- Maintaining precise records of all property-related documents and tax payments.
- Obtaining permits for improvements and requesting lien waivers from contractors.
- Commissioning updated surveys before making improvements near property lines.
Addressing potential issues promptly is necessary for these steps to work for you. Teaming up with experienced title professionals who know local property records will go a long way in preventing expensive mistakes.
Secure Your Property Rights With Expert Title Services
These precautions significantly reduce your risk and ensure protection if problems arise, providing peace of mind throughout your property ownership. Finding a title defect after closing isn’t insurmountable. It’s merely a detour that requires expert navigation. With proper title insurance and experienced professionals in your corner, most issues can be overcome.
Cortes & Hay Title Agency have been helping New Jersey property owners tackle title challenges for over 50 years. Our team knows the local landscape inside out, and we’re committed to protecting your investment every step of the way. Contact us today to learn how we can help secure your property rights against unexpected title defects.