How to Handle Title Disputes in Real Estate Transactions

Real estate transactions are often complex, involving numerous legalities, financial obligations, and paperwork. One of the most critical aspects of any property deal is ensuring that the title is clear, meaning that no legal claims or encumbrances are preventing the buyer from taking full ownership. However, title disputes can and do happen, and they can cause significant delays, complications, and financial stress for all parties involved.

Understanding how to handle these disputes is essential for anyone involved in a real estate transaction. Continue below to learn more.

What is a Title Dispute?

A title dispute arises when there is a disagreement or issue regarding property ownership. It can occur at any point in the real estate transaction process, whether the buyer is preparing to close on a home, the seller is attempting to transfer ownership, or there are already disputes between co-owners of a property. Some common causes of title disputes include:

• Outstanding liens or claims: If there are any unpaid debts tied to the property, such as mortgages, property taxes, or contractor bills, they can create a lien on the property, which must be resolved before the title can transfer.
• Forgery or fraud: In rare cases, a fraudulent transfer of property ownership can result in a dispute. For instance, someone might have forged a previous owner’s signature to transfer ownership.
• Undiscovered heirs: Sometimes, a person who has inherited property may not be aware of other heirs claiming it, resulting in a legal dispute over who truly owns it.
• Incorrect public records: Public records errors, such as incorrect deeds or mistakes in the land registry, can also cause confusion regarding property ownership.
• Boundary disputes: Disputes can arise when neighbors disagree about property boundaries. If they involve encroachments or incorrect property lines, they can affect the title.

The Importance of Title Insurance

Obtaining title insurance is one of the best ways to protect yourself from title disputes. Title insurance is a policy that protects the buyer and the lender in case any issues with the title arise after the transaction has been completed. It covers problems like hidden liens, errors in public records, or claims from undisclosed heirs.

Title insurance companies conduct thorough title searches before issuing a policy, ensuring the property has a clear title at closing. However, even with title insurance, disputes can arise, and the policy can help cover the legal costs of resolving them. Buyers and sellers should always ensure they are protected by title insurance to mitigate the risks of title disputes.

Steps to Handle Title Disputes

If you find yourself in the middle of a title dispute during a real estate transaction, here are the essential steps to take to handle the situation effectively:

1. Identify the Source of the Dispute

The first step in resolving a title dispute is to understand its source. Is it a lien from a previous owner? A clerical error in the public records? Or perhaps a claim from an unknown heir? You’ll need to identify what’s causing the dispute so you can take appropriate action to resolve it. This may involve reviewing public records, speaking with past owners, or consulting a real estate attorney for guidance.

2. Contact the Title Company or Escrow Agent

If you have title insurance, contact the title company when you discover the dispute. The title company is responsible for clearing up issues with the title and can help you navigate the claims process. If there is a lien or another issue, the title company may work to resolve it on your behalf. In some cases, the title company may cover the costs of resolving the dispute if it falls within the scope of your title insurance policy.

3. Consult with a Real Estate Attorney

Title disputes can be legally complex, and in some cases, they may require litigation to resolve. Working with a real estate attorney is crucial if you are facing a dispute that involves a significant financial investment, such as the ownership of a home or commercial property. A Charleston law firm can help you understand your legal rights, negotiate with other parties involved, and represent you in court if necessary.

A real estate attorney can also advise on dealing with claims from other parties, such as previous owners, creditors, or relatives of the deceased property owner. In some cases, they may be able to help you clear the title without going to court through negotiation or mediation.

4. Clear the Title

Once you’ve identified the issue and consulted with the necessary professionals, the next step is to clear the title. Depending on the nature of the dispute, this may involve several actions, such as:

• Paying off outstanding debts or liens.
• Correcting clerical errors in public records.
• Negotiating with other parties to settle claims.
• Completing legal paperwork to transfer ownership to rightful heirs.

If the title dispute is more complex, it may take some time to resolve. Patient and clear communication with all parties involved is essential to avoid further complications.

5. Consider Alternative Dispute Resolution

In some cases, title disputes can be resolved outside of court through alternative dispute resolution methods such as mediation or arbitration. These processes are typically faster and less expensive than litigation. A mediator or arbitrator can help both parties reach a mutually agreeable solution without needing a lengthy court battle.

6. Revisit the Closing Process

Once the title issue is resolved, the closing process can proceed. At this point, the buyer can confidently move forward with the transaction, knowing that the title is clear and there are no unresolved claims or disputes. A new closing date must be scheduled if the buyer or seller had previously delayed the closing due to the dispute.

Need help with legal services for real estate transactions in Charleston, South Carolina?

Title disputes can complicate real estate transactions, but they don’t have to be a deal-breaker. With the proper knowledge, tools, and professionals, most title issues can be resolved efficiently, allowing the transaction to proceed. The key is to act quickly, seek professional help when necessary, and ensure you’re protected with title insurance. In turn, you can confidently navigate the complexities of real estate transactions and avoid the costly setbacks that title disputes can cause.

If you’re dealing with a title dispute or need assistance with a real estate transaction, Leffew Law Firm is here to help. Our experienced team of Charleston lawyers can guide you through every step of the process, ensuring your transaction is smooth and legally sound. Reach out today for a consultation.