Liens, ECB’s, fines, encroachments, and encumbrances can place what is called clouds on title.
All kinds of things can cloud the title to your home. Perhaps a contractor placed a lien on the house for unpaid bills, for instance. If you bought your house with your spouse and then divorced, it may be unclear if your ex still shares the title. If you’re selling, the purchaser’s mortgage lender will want the title cleared. That way no rival owners can challenge the lender’s right to foreclose.
If you’re ready to sell a home but aren’t sure you have a clear title, that is something you’re going to need to work out. Without a clear title or a marketable title as its usually called, it’s going to be incredibly difficult to find someone who will be able to obtain financing for the purchase. Mortgage lenders will not finance a purchase that doesn’t have a clear title because problems that arise from clouds on the title could affect the value of the property or possibly their ability to foreclose on it in the future.
Buyers can choose to take on the risk of purchasing a property with a title that isn’t clear, but it’s usually a very bad idea. Construction, mortgage and judgment liens can end up costing buyers considerable amounts of money and even lead to foreclosure when the title isn’t clear. These unexpected liens will not be a problem if the title has already been cleared.
Title issues can also come up during a property survey and include neighbor disputes over property lines, so it’s important to clear these issues up before attempting to sell a home. Even though it’s possible to sell, the buyer may be left with a headache when trying to determine where the property line is.
If you’re trying to sell a home with clouds on title, your attorney can help you understand the risks and what it means to you. While buyers can take on the risk willingly, it’s better to get the title cleared and to open the property up for more potential buyers. Because most deeds used in home sales come with a guarantee, if a title cloud does turn up after the sale, it’s possible the buyer can hold you liable for the problems.
Your attorney can help walk you through the legal requirements to clear a title, so you can make a clean sale and be sure that the property won’t come back to haunt you.
These are just a few things to consider. Making good choices now can help you in the long term. If you have any questions or need help with your home buying or selling process give us a Call at 212-202-0489.
Source: The Nest, “Can a House Be Sold Without Clearing the Title?”