Title records validate who is the owner of real property. They allow mortgage companies and banks to use real property as the collateral for a mortgage. Lenders can record liens, as can creditors who secure judgments from the courts. Those liens and ownership records turn up during title searches.
Title searches are an important component of any real estate transaction. They verify that the seller has the legal right to list the property and ensure that the buyer can assume legal and physical possession of the property at issue. In some cases, those preparing for a real estate transaction discover that a former owner still shows up on local title records as a current owner. What happens in that situation?
Title corrections must occur promptly
Mortgage lenders generally require that buyers purchase title insurance. A lender’s policy protects the mortgage company or bank if an outside party brings a successful claim against the property in the future.
If a prior owner still shows up on title records, the current owner may need to locate the other party to execute a deed that they can record to remove that person from title records. They can also initiate quiet title proceedings.
If the other party is difficult to locate, deceased or otherwise unable to sign a deed, a judge can update title records to remove them. Until those corrections take place, the buyer likely cannot acquire a title insurance policy, and the closing cannot occur.
Taking immediate steps to address inaccurate title records can protect people who are at risk of delayed or canceled transactions. Title records that are not accurate can cause headaches, and people trying to address title blemishes often need legal assistance, and that’s okay.