Whether you are selling or purchasing commercial or residential property, delayed real estate transactions can be costly, putting moving dates and business operations at risk. Unfortunately, both buyers and sellers often fail to recognize potential problems until closing is approaching. Understanding the most common triggers for real estate title disputes will help you better prepare for your upcoming real estate transaction, whether that means avoiding a dispute or anticipating potential problems and taking steps to resolve the issue as early in the process as possible. If you anticipate a possible title dispute, it is in your best interest to speak with an experienced California real estate attorney as soon as possible. The further into the process you get without resolving legal issues, the greater the risk of delays, inconvenience, and the financial losses that often accompany a delayed real estate closing.
Here are the top five reasons we see real estate title disputes:
An Owner Isn’t Listed on the Deed
In California, legal ownership of real estate is typically determined by looking at the deed. However, in some circumstances an unlisted party may have an ownership interest in the property. One common reason this happens is that an unmarried couple or two people doing business together purchase a piece of property, but one has credit problems. The right approach in that situation is to have the person with good credit take out a mortgage, then transfer the deed to himself and the other party jointly. Alternatively, the joint owners may have a written contract spelling out what interest each has in the property and what contributions each will make. But, this step often gets skipped. When that happens, the owner who isn’t listed on the deed may have to file a lawsuit to protect his or her interest in the property.
Boundary disputes are a common cause of title disputes and other delays during the closing process for a real estate transaction. Often, boundary disputes arise from good-faith misunderstandings. The “property line” may have been misplaced for generations, with structures or fencing crossing the boundary or placed on the wrong side of the line. The conflict may arise only when one landowner examines the legal description of the property in anticipation of sale, or a potential buyer or real estate agent raises an issue.
Easements That You Did Not Know About
As you may know, an easement creates a legal right for a party other than the landowner to use property for a specific purpose. For example, a public utility may have an easement on a certain property in order to access certain utility lines, or a private party (such as a neighbor) may have an easement that allows him or her to use a portion of your driveway to access his or her own driveway. Many people have never dealt with easements, and so may not think to check for easements or question usage of the property. However, easements can impact the landowner’s freedom to use property as he or she sees fit. For instance, a landowner could not put a barrier across a section of the property where a neighbor had been granted an easement to access his land without violating the neighbor’s legal rights. Therefore, unanticipated easements can lead to title disputes.
The Deed Was Conveyed Illegally
Illegal conveyance of a deed isn’t as common as some of the other circumstances on this list, but is a serious issue than can result in a defective title. Some examples of illegal conveyances that may result in defective title include transfer of the property by someone who lacked the legal capacity to make the transfer, forgery, or receipt of the deed through fraud.
Public Record Errors
A simple error in the public record can derail a real estate transaction. Although errors can often be resolved without resort to a title dispute, they cannot be ignored. Once these inconsistencies are identified, the title insurance company will typically provide notice that related claims will not be covered. Some common examples include a missing piece of the legal description of the property in the recorded deed, misspelling of the name of the property owner, or failure to include legally-mandated language.
Contact a Southern California Real Estate Attorney
If you need assistance with a real estate transaction, or if you have questions about buying or selling real estate, Riverside real estate attorney Marty E. Zemming has the knowledge and experience you need. He has represented clients across a wide range of practice areas for 17 years, and will put that experience to work for. Contact Wagner & Pelayes, LLP for more information about how we can help with your real estate transaction.