Acquiring a property with a great location, charming features and a price that fits the budget is rarely easy. When you find one, it is natural to feel the need to sign the paperwork immediately. Before you do, make sure there are no title defects that could jeopardize your investment.
Discoverable through a title search, title defects or clouds on the title can affect your ownership rights to a property. If the real estate you aim to buy has a defective title, it may be best to walk away from the deal altogether.
Potential deal-breakers in property purchases
Here are title defects that could lead to legal troubles in the future:
- Liens: Unpaid taxes, mortgages or other debts attached to the property.
- Boundary disputes: Disagreements about property lines.
- Easements: Rights others may have to use part of the property.
- Fraudulent transfers: Previous sales or transfers made illegally.
- Errors in public records: Mistakes in deeds or other official documents.
- Undisclosed heirs: Unknown individuals who may have a claim to the property.
If any of these title defects surface during the title search, it is often wise to refrain from proceeding with the deal. The potential risks and costs associated with resolving these issues can far outweigh the benefits of purchasing the property.
Suppose you buy a house with a recently renovated kitchen. The previous owner never paid the contractor, so the contractor placed a mechanic’s lien on the property. The court could hold you legally responsible for paying this debt or potentially face a lawsuit.
Due diligence is vital in real estate transactions
The law provides some protections for buyers, but it is still essential to be vigilant. Georgia follows the “caveat emptor” or “buyer beware” principle, which puts the buyer responsible for discovering any property issues. This makes conducting a thorough title search even more important.
Obtaining guidance from an attorney before finalizing a property purchase is advisable. Remember, while it can be disappointing to let go of a property you have set your heart on, it can be a far better alternative to legal battles or financial losses in the future.