Title Defects
Hidden title defects in Texas can create catastrophes for purchasers of real estate. A hidden title defect can potentially result in the loss of the purchaser’s total investment in the property. This can be devastating for a first-time homebuyer, as well as for a seasoned real estate investor. Our team can assist you in determining if the property that you are purchasing has possible title defects in Texas, or if the property appears to clear of any title defects. Methods that we utilize to investigate property title issues include Title Review and a Title Commitment.
Title Review
In a Title Review, we examine the abstract of title on the property, and then issue a written legal opinion regarding the property’s title, based on our findings in the abstract of title. A Title Review typically requires 2-5 days to complete. This process is important prior to entering into a contract for the sale of real property, particularly for real estate transactions involving simultaneous closings, assignments, or off-market deals.
Although this is a quicker alternative to a title commitment, the attorney will only be able to review and analyze documents that are publically recorded. If there are title documents that are not publicly recorded, the attorney may not have all the information to give an accurate opinion. In addition, title reviews do not typically include a title policy so there is a bit more risk involved. This type of title work is usually utilized when the title company is not willing to issue a title policy like on a wrap around mortgage or subject to transaction.
Some of the potential title defects in Texas that we investigate and identify are:
- Errors in Public Records
- Unknown Liens
- Illegal Deeds
- Missing Heirs
- Forgeries
- Undiscovered Encumbrances
- Boundary/Survey Disputes
- Undiscovered Will
- False Impersonation of Previous Owner
Title Commitment
The second option is to get a title commitment. A title commitment is typically only ordered after a contract has been escrowed through a title company. A title commitment will state what the terms of the title policy would be, title defects the title company has found, and what requirements would need to be completed to issue a title policy. A title policy will insure title from title defects that may have been in place prior to a buyer purchasing the property.
Unfortunately, a title commitment is not typically conducted until you have a property under contract and it can typically take up to 2 weeks to be provided. This can prevent you from acting fast on a real estate investment. In real estate, time is of the essence, and a matter of hours could mean losing a deal.
Deciding which tool to use will depend on the type of transaction you are utilizing. Regardless of which option you choose, it is imperative that you conduct title work to ensure efficiency in evaluating properties, prevent liability, and maintain your reputation as a real estate professional. Who wants to spend countless hours on a transaction to later find out there are title defects that could have been discovered earlier in the process?
Real Estate Investments with Title Defects
Fortunately, a deal is not dead if you do find a title defect. In fact, these scenarios can be huge opportunities. Most common real estate investors will move on to the next deal if there are title defects. A savvy real estate investor will evaluate the title defect with a competent real estate attorney and determine whether they can find a solution. Finding a title defect can be used as leverage to negotiate a great deal.
Our Real Estate Investment Services Package will help real estate investors determine the risks of title and help clear title defects if found. If you are private money lender and a borrower is painting a dream of a winning investment, wouldn’t you want to make sure their calculations are accurate? We are committed to making sure we protect our investors interest. With our Real Estate Investment Services Package we can help reduce title risks and ensure you have all the information you need to make the best investment. Contact one of our experienced attorneys to assist you with your title work today.
