When it comes to closing a real estate transaction, a clear title is critical. Title defects—whether discovered during due diligence or after closing—can delay deals, threaten ownership rights, or even lead to costly litigation. At Liberty Land Abstract, we’re committed to helping our clients identify, address, and resolve these issues prior to closing, before they become bigger problems.

Below, we break down common title defects and the legal remedies typically used to clear them.

What Is a Title Defect?

A title defect is any issue that challenges or impairs the legal ownership of a property. These defects can prevent a buyer from obtaining a marketable title, or a lender from securing a valid lien, and can also expose prior owners to legal risk.

Common Types of Title Defects

1. Liens and Judgments

Outstanding mortgages, tax liens, mechanics’ liens, or court judgments against current or prior owners can remain attached to the property.

Remedy:

• Payoff and release of liens.
• Subordination agreements (in some cases).
• Court action may be needed for contested or expired liens.
• Escrow is being held for an agreed-upon period post-closing, allowing for the closing to occur while the seller resolves the lien.
• Reliance on the mutual indemnification agreement or indemnity letter when judgment or lien pertains to a prior owner no longer in title.
• Court action may be needed for contested or expired liens in limited situations.

2. Errors in Public Records

Clerical mistakes, incorrect legal descriptions, or missing documents in public records can affect ownership.

Remedy:

• Corrective deeds or affidavits of correction.
• Re-recording corrective deeds or other documents with accurate information.
• Risk analysis to determine if Liberty Land Abstract can insure over the issue.

3. Breaks in the Chain of Title

Missing links in the property’s ownership history, such as unrecorded transfers or gaps, can cast doubt on ownership.

Remedy:

· Quiet title actions in court to establish rightful ownership.

· Affidavits of heirship in estate-related cases.

· Reliance on the mutual indemnification agreement.

· Risk analysis to determine if Liberty Land Abstract can insure over the issue.

· In some instances, a quiet title action in court may be necessary.

4. Unknown Heirs or Probate Issues

When property is inherited and heirs/beneficiaries, before entering contract, without a clear, valid will, and failing to complete probate, or when there is no valid will, failing to complete an administration of the owner’s estate, we must ensure that there are no heirs/beneficiaries that may later assert ownership.

Remedy:

• Probate proceedings or surrogate court determinations may be necessary.
• A title company may require indemnity agreements or legal clearance.
• In certain circumstances, proceed with heirship affidavits.

5. Fraud or Forgery

Past deeds signed under false pretenses or fraudulent transfers undermine title validity.

Remedy:

• Quiet title litigation if discovered prior to closing.
• Title insurance may cover losses depending on the policy if issue only discovered post-closing.

6. Unreleased Easements or Rights of Way

Old utility easements, access agreements, or use rights may still be recorded against the property.

Remedy:

• Legal review to determine enforceability.
• Release documents from the beneficiary of the easement, if no longer in use.

The Role of Title Insurance in Addressing Defects

Title insurance protects buyers and lenders against losses from title defects, including those that may not be immediately discoverable. At Liberty Land Abstract, our team proactively researches and identifies issues before closing, and when defects arise, we work hand-in-hand with legal counsel to resolve them efficiently.

Key Takeaways for Real Estate Attorneys and Lenders

• Early title review is essential: Order the title early to give time to resolve defects.
• Work closely with your title company: We can guide you through proper legal remedies.
• Not all defects are fatal: Many can be cured with proper documentation or insured against after a risk analysis. Only in some instances may court action be necessary.
• Title insurance offers peace of mind, especially for hidden risks like fraud or unknown heirs.

Need help clearing a title issue or have questions about a pending transaction? Connect with our team at Liberty Land Abstract—we’re here to support you with expert service, in-house legal guidance, and a commitment to smooth, secure closings.