What first-time real estate purchasers need to know about titles

What first-time real estate purchasers need to know about titles

On Behalf of | Feb 3, 2019 | Real Estate Litigation |

When someone purchases property in Louisiana, he or she will receive proof of ownership. Realtor.com explains that the document signed by the seller and the buyer is known as the deed. However, this is not the same as the title. In fact, the title is not a document. It is, instead, the legal rights to the property, including ownership. 

According to FindLaw, a property title can be defective if not all the legal rights to the property are passed on to the new owner. That is why a title search is performed before the buyer signs the deed and other purchase documents. A real estate professional searches through the recorded history of the property, which may be found at the county courthouse.

A common title defect is a lien. This is a legal claim to the property filed by a creditor when a debt is not paid. For example, say a contractor renovates the home, converting the garage into a mother-in-law apartment. However, the property owner fails to pay the contractor for the work that was performed. The contractor has the right to file the lien because of the breach of contract. A seller cannot sell the property until the issue with the contractor is resolved.

The title search may also reveal issues such as a past ownership claim. Perhaps parents left the property to their children, and two of them agreed to let the third live in the house. Several years down the road, that sibling decides to sell the house. He or she cannot do so until the other two owners have also agreed to the sale because they also have legal ownership rights.

What action a buyer must take to clear a defective title may vary based on the type of defect. Even when a title search reveals no issues, the buyer and the lender still purchase title insurance to protect their purchase against a later defect.