A title problem before closing is one of the calls nobody wants to get. You have a contract, a moving date, and maybe a lender waiting, and now the title search has turned up something that has to be cleared first. The good news is that most title problems can be fixed. Knowing what the common ones are, and what happens next, makes the wait a lot less stressful.
Why a Title Search Finds Problems at All
A title search reviews the public records on a property: deeds, mortgages, judgments, liens, and easements. The goal is to confirm the seller truly owns the property and that nothing from the past will carry over to the buyer. Some of those records go back many years and many owners, so it is not unusual to find something that was never finished properly. Finding it before closing is the whole point. It is much easier to fix now than after you own the home. You can read how we search for title problems before closing. If you are wondering whether you even need this protection, our post on common title insurance misconceptions covers the questions we hear most.
Six Common Problems a Title Search Can Turn Up
1. An Old Mortgage That Was Never Released
A previous owner paid off their mortgage years ago, but the lender never recorded the satisfaction of mortgage. On paper, the loan still looks open. This is one of the more common findings, and it is usually fixable: the title company works with the lender to get the satisfaction recorded. It can take longer when the original bank has merged or closed, because someone has to track down who holds the old loan today.
2. Liens and Judgments Against the Seller
Unpaid property taxes, state or federal tax liens, a contractor’s mechanic’s lien, or a court judgment can all attach to a property. In most cases these are paid off from the seller’s proceeds at closing, and the title company makes sure the release is recorded afterward. The delay comes when the creditor, whether a bank, a contractor, or a government agency, is slow to provide a payoff amount or sign off on the release.
3. An Estate That Was Never Settled
Sometimes an earlier owner passed away and the property was never properly transferred through their estate, or an heir was never accounted for. These can take the most time, because the estate paperwork may need to go through Surrogate’s Court before the property can be sold with a clear title.
4. Mistakes in the Public Records
A misspelled name, a wrong lot number, or an error made when a document was recorded can all cloud a title. These sound alarming, but they are usually corrected with the right paperwork, such as a corrective deed or an affidavit.
5. Open Permits and Town Records
A title search looks at the land records. Open building permits, a missing certificate of occupancy, code violations, and unpaid water or sewer bills are kept by the town or village, and they are checked with separate municipal searches. A finished basement or an addition that was never inspected can hold up a closing just as much as a lien. Ask early whether those searches have been ordered for your property.
6. Boundary and Easement Questions
A survey may show a fence or shed over the property line, or the search may turn up an easement. Most easements are routine, like a utility company’s right to run lines along the edge of a lot. A boundary question can take longer if a neighbor has to be part of the fix.
What Happens to Your Closing Date
Most title problems are cleared before closing. When a closing is delayed, it is usually because someone outside the deal has to act first: a lender recording a release, a creditor providing a payoff, or an estate finishing its paperwork. Those parties work on their own schedule, which is why the time to start is as early as possible. You can read more about how title companies work through these issues in our post on resolving title issues and claims.
What to Do If Your Title Search Finds a Problem
Follow the directions of your title company. They have seen these problems before, and they know the steps to clear them. Your part is to answer questions and send any documents they ask for as quickly as you can.
Don’t try to settle the problem on your own, like paying someone directly or making a side agreement with the seller. Let the title company and your attorney handle the payoff so the release is recorded properly and the problem is actually gone.
Can you still close on time? Sometimes, yes. When one item is still waiting on someone outside the deal, the closing may still go ahead with part of the seller’s proceeds held in escrow until that item is cleared. It takes a written agreement, and the buyer’s lender has to approve it, so it is not always an option. If a problem can’t be cleared by the closing date, your attorney can tell you what your contract allows. Either way, ask your title company early which path fits your situation.
For Buyers, Sellers, and Realtors: Start Early
The single best way to keep a title problem from becoming a delayed closing is to contact the title company as early in the process as possible. The sooner the search starts, the more time there is to clear anything it finds.
- Buyers: Get your title company involved as soon as your contract is signed, and respond quickly when they need something from you.
- Sellers: If you know about an old mortgage, a lien, or an estate that touches the property, tell the title company up front. We work with sellers to coordinate lien satisfactions and address anything clouding the title so you get to the closing table.
- Realtors: Bring the title company in early on every deal, so you can keep your clients updated on where the transaction stands.
For more ways to keep things on track, see our tips for a smooth title insurance closing.
Talk to Title Connect Agency
Title Connect Agency is based in Goshen, New York, and we take a team-based approach to the title process. We believe in transparency and in making sure everyone involved in the transaction stays updated, whether you are buying, selling, or representing a client. If you have a title question, or a closing coming up, call us at 845-615-9696 or reach out through our contact page.
