Property title: Clear or clouded?

To sell a home and transfer ownership to a new owner, the property must have a clear title. Clear titles are documents proving legal ownership rights for the property in question. Without a clean title, the sale cannot move forward, and both buyer and seller might face hefty fees.

Here are some of the most common questions about titles and title insurance:

What is a clear title?

A clear title is any title with no lien from creditors or anyone who poses questions regarding legal ownership. A clear title-holder is the true owner of the property, and no one else can assert a judicial claim against them.

How does a clear title work?

Having a clear title can show the home has outstanding financial obligations, as it proves an owner can sell the property. Sale of property may become disputable without a clearly titled document or the proper ownership of the property itself. The existence of a lien can also possibly invalidate ownership.

Conducting a title search

Property title professionals can help find the details about ownership of a given property. The first stage in title clearing is title research, or title examination. During the process, the title company pulls the records pertaining to the title of the property from the local records office.

Depending on the age of the home and the municipality, title companies may conduct searches either through digital

Uncovering title issues

If there are issues discovered during the title research phase, they are known as title liabilities or "clouds" on the title. These indicate any issue which could block an unopposed owner's ownership for a long time.

What is title insurance?

Title insurance protects a potential buyer or mortgage lender in the event there are clouds on a title. The seller typically pays for an owner's title insurance policy, but lender's title insurance can also factor into the equation.

Finding out about claims against a title can cause delays and incur expensive administrative fees, but an insurance policy can provide coverage for risks like falsified documents or flawed records.

Understanding title insurance and the risks of title defects will help you be a more informed buyer or seller. When in doubt, work with a real estate agent or insurance professional for more guidance regarding legal claim to a property.