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What does it mean to have a defective title?

On Behalf of | Sep 28, 2021 | Real Estate Litigation |

For investors in Florida, there are numerous things to consider when investing in property. Many people overlook the issue of having a title that’s defective, which almost always has a huge bearing on the overall profitability of their investment.

What a defective title means for investors is there’s an obstacle between you and your ownership of the property. Not all defects in a title are created equal, so the insurmountability of that obstacle may vary dramatically.

How a title becomes defective

Each defective title case is unique, each one with its own risks and challenges. In some cases, it’s best just to walk away. In order to know what your wisest investment move is, it’s necessary to learn how these various defects are identified and remedied.

There are three main types of defective titles:

  • Unpaid debts
  • Public record errors
  • Ownership/access disputes

Each of these categories comes with its own family of issues that contribute to making a real estate title unclear. Unpaid debts may be due to tax liens imposed by the government, mechanic’s leans filed by contractors who worked on the property and weren’t paid, and judgment liens, which are court-imposed after claims on a property are won by a creditor.

Public record errors can happen at any level; one misfiled document or improperly cross-referenced deeds lead to a critical real estate error. With ownership and access disputes, it often has to do with a property’s boundaries but can also occur with missing heirs reappear.

It’s important to remember that even though a property looks perfect from start to finish in the walk-through, there may be unforeseen problems that add risk and difficulty to the ownership. This type of title issue is crucial information to have early on in your investment decision process.