Recently, I was asked by a consumer what exactly a title defect was and what kind of things a policy won’t cover.
It’s important for everyone in our industry to understand all aspects of title and not just how to cure title.
Below will explain exactly what a title defect is along with some examples of lien issues.
You will also see what a title policy doesn’t cover.
You can also find this information and more in the following link:
If you have any questions, please feel free to email me @ email@example.com.
What is a title defect?
A title defect is anything that can cause a title to be considered invalid or defective in some way. Some examples are:
- Invalid documents due to forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation.
- Failure of any person or entity to have authorized a transfer or conveyance.
- A document affecting title that is not properly executed, signed, witnessed, notarized, or delivered.
- Undisclosed or unrecorded easements not otherwise apparent on your land.
- No right of access to and from the land.
- A document executed under a falsified, expired, or otherwise invalid power of attorney.
- A document not properly filed, recorded, or indexed in the public records.
- Ownership claims by undisclosed or missing heirs.
- Defect arising from an improper prior foreclosure.
- Undisclosed restrictive covenants affecting your property.
Lien issues can also cause title defects. Some examples of lien issues are:
- Any statutory or constitutional contractor’s, mechanic’s, or materialman’s lien for labor or materials that began on or before the policy date. Talk to an attorney about your rights.
- Lien for labor or materials furnished by a contractor without your consent.
- A previous owner failed to pay
- a mortgage or deed of trust
- a judgment, tax, or special assessment
- a charge by a homeowners or condominium association.
- Other liens or claims that may exist against your title that are not listed in the policy.
Notify your title company immediately if someone files a lien or claims an interest in your property. Failure to do so could jeopardize your claim. Contact the underwriter listed on the policy and follow their claim-filing procedures.
What doesn’t a title policy cover?
A title policy generally won’t cover mistakes or defects, financial issues, or rights issues.
- Defects that are created after the policy is issued.
- Defects that you create, or of which you had knowledge.
- Problems that arise because of your failure to pay your mortgage, or to obey applicable laws or restrictive covenants that were disclosed to you.
- Certain taxes and assessments.
- Losses resulting from rights claimed by someone else occupying the land. The title company may need to inspect the property. There may be a charge for the inspection.
- Homestead, community property, or survivorship rights of a policyholder’s spouse. Texas homestead laws address the rights of a spouse or survivors of a property owner.
- Claims from other people who may have certain rights if your property is near a body of water or has a river or stream flowing through it.
- Condemned land, unless a condemnation notice appeared in the public record on the policy date or the condemnation occurred before the policy date.
- Violations of building and zoning ordinances and other laws and regulations related to land use, land improvements, land division, and environmental protection.
- Disclosed restrictive covenants limiting how you may use the property. Request copies of restrictions and have your attorney explain them.