5 Common Property Title Issues
5 Common Property Title Issues You May Run Into
Once your offer to purchase has been accepted, your financing has been approved and a closing date has been set, you might breathe a sigh of relief. But there’s another important step before you take possession: preparing and transferring the title to your home.
When a real estate lawyer—or a notary, in Quebec—starts working on the title, several tricky issues can come up. But not to worry; most of the time, you can rely on your REALTOR® and this professional to help navigate the process.
Real estate lawyers review the contract, making sure it complies with all regulations, and that all signatures are in the right place. By viewing public documents like deeds and land records, they then verify whether the property is being sold by the individual, corporation, or estate that owns it and check whether the home is subject to sales tax. Title searches are crucial to make sure any claims against a property are paid before the seller receives payment from the buyer.
1. Existing liens
Liens against a property can include anything from unpaid debts to missed tax payments, and they must be cleared before you take over the property. Otherwise you, as the new owner, are responsible for paying them, says Chiasson.
“Most times, you’d see a builder’s lien if it’s a new construction or has been significantly renovated, and those are placed by contractors that didn’t get paid by the owner; it’s important the lawyer finds that lien, so it’s taken care of by the seller’s lawyer,” she explains.
“There can also be judgments against the individual owners of a property for things like default on a credit card or Canada Revenue Agency taxes. The lawyer ensures there are enough funds to cover those.”
2. Encroachment issues
Sometimes, a neighbour’s fence might be a few inches over the property line—that’s an encroachment, but not a serious one. However, a lawyer may discover an entire addition to the home or an in-ground pool encroaches on someone else’s land.
“If a client came to me and said, ‘It looks like the neighbour’s shed might be over my property line,’ I’ll look to see if there’s any easements or agreements in place—sometimes there are and sometimes there aren’t,” says Chiasson.
“For example, Nova Scotia has a lot of rural properties, and many people have shared driveway agreements, so I check to see if that’s on title. If there’s an easement agreement or an encroachment agreement in place, it flows with the property.”
3. Title fraud
Sometimes, lawyers find red flags, like forged or stolen documents that were used to commit title fraud without the property owner’s knowledge, notes Chiasson.
Buying title insurance can protect you against any issues that are discovered during a search.
“We check for anything unusual, such as if the title was recently transferred, and we verify our clients’ identities,” she explains. “It’s important to have REALTORS® and lawyers involved in the process, so you have multiple layers of identification verification. Private deals are much more susceptible to identity fraud.”
4. Legal use or zoning problems
Sometimes, a seller’s use of a property doesn’t comply with zoning bylaws. Maybe they set up a store in their basement, for example, or turned a commercial space into a residential loft.
“With short-term rentals becoming more frequent, verifying municipal zoning is incredibly important. If people didn’t follow zoning requirements or pull proper permits, those sorts of things are covered by title insurance,” says Chiasson.
5. Mistakes with public records
Errors about things like square footage or property lines can also make a sale complicated, notes Chiasson, because that can affect your home’s appraised value.
“In Nova Scotia, we changed from an old registry of deeded system to the online land registration system in 2004. And before that, things like easements got missed or restrictive covenants didn’t get properly applied to a parcel of land that should have. So, we always check, and then we go back to the clients and their lawyer to say, ‘We think these apply’.”
Title searches protect buyers, sellers and lenders for major issues that could derail a sale. Being prepared by working with professionals like real estate lawyers and REALTORS® helps the transaction go smoothly for everyone.
Originally posted here - https://www.realtor.ca/blog/5-common-property-title-issues-you-may-run-into/33535/1361