Why make sure the property title is clean before closing a deal?

On Behalf of | Apr 15, 2022 | Real Estate

Whether you’re thinking of selling or investing in property in Texas, it’s important to know about clean property titles. You might also know it as a clear title, a just title, or a free and clear title, but it all means the same thing, and for many who are in the property game, it’s something you’ll want to have. The reason is simple: A clean property title means that it is indisputable who owns the property and who has the legal right to claim ownership of the property.

A firm statement of ownership

Clean property titles are important in real estate because they establish the owner of the property clearly and firmly. This means that that title is free from any issues such as liens that might throw the ownership of the property into jeopardy. Other types of issues that may muddy the waters of property ownership include encroachments, commonly referred to as boundary disputes, as well as easements. The most common liens or defects that come into play with property ownership are:

• Mortgages
• Municipal liens
• Unpaid property taxes
• Violations of property codes
• Inaccurate legal descriptions
• Misspelled or incorrect owner names

Whenever legal ownership of a property is thrown into question, it has the potential to make things difficult both for the person selling and the investor. For sellers, it’s important to know what kind of a title you’re working with so that you’ll have some gauge of the offers you can expect. For investors, all of the defects that come with a property title that isn’t clean are transferred to buyers upon the completion of the transaction.

The process of transferring a property title from seller to buyer when the property sale goes through generally involves the use of a title company, which will look into the property title to verify that there are no issues. Although investors are free to go through with the transaction even with the title isn’t clean, it may make it difficult or impossible to get a mortgage or find an insurance policy once you are the property owner.