Buying real property in New York is expensive and often competitive. Those looking for starter homes may be up against dozens of other couples in a similar situation. Once property buyers find a home that meets their needs, they make an offer and negotiate a purchase agreement with the seller.
Before the closing, many steps are necessary to ensure that the transaction goes through without issue. Mortgage companies typically require inspections and appraisals. Title research is also necessary.
What happens when the property that a buyer has made an offer on turns out to have a major title defect?
Title defects can delay closings
Many different issues can constitute title defects. Perhaps a prior owner still shows up as a current owner. Such situations are relatively common when people sell homes due to the death of the owner or divorce.
Other times, there might be liens against the property. Mortgages, home equity lines of credit and even construction liens pursued by professionals can impact the title for the property and prevent a transaction. Easements can also be a consideration, as can zoning complications.
Sometimes, the characteristics of an area have changed and local zoning has shifted. The variance in place may only apply to the current occupants of the home. Title defects that turn up during title insurance research may require prompt action to resolve.
Sellers usually address title issues
Buyers don’t yet own the property and therefore have minimal influence on title issues. Instead, they rely on the sellers to take the appropriate steps. Executing deeds can be a way to correct vesting and remove old owners from title records.
Other times, the sellers may need to request a quiet title hearing in civil court. Judges can remove paid liens, terminate outdated easements and otherwise correct inaccurate title records. Successful quiet title proceedings can address the issues that show up during a title search so that the transaction can proceed.
Buyers have to plan for the unpredictable
The reality is that not all title issues are easy to resolve. Buyers making offers on properties generally need to protect themselves by including appropriate contingencies.
That way, if the closing falls through, their earnest money isn’t at risk. Those intending to make cash purchases do not have to secure title insurance for a lender, and they may require guidance to ensure that they don’t unintentionally put themselves in a precarious position.
Recognizing the types of issues that can arise during real estate transactions can help people more effectively protect themselves. Title issues can delay or cancel real estate transactions depending on the circumstances. Seeking legal guidance can help.