A Cloud on Your Title Can Delay a Home Closing
An issue with your title can delay closing on your new home.
Picture this: You’ve found your dream home, but first you need to sell your current home. The purchase contract is signed and the date is set. All your stuff is boxed up and ready to go. The moving truck is in the driveway.
And then you get a phone call that the closing needs to be delayed because the title agent found a cloud on your title.
Believe me, it happens.
What is a cloud on your title?
Just about every real estate purchase contract requires the seller to convey marketable title to the buyer. Having a cloud on your title means that you have some sort of title issue that must be corrected.
Title issues are often caused when someone made a mistake (incorrect notary acknowledgment) or failed to do something (file a mortgage release in the county recorder or clerk’s office). Some title issues are caused by outright wrongdoing (fraudulent signature on a deed).
How can you fix a cloud on your title?
Check the effective date on your owner’s title insurance policy. If the title issue occurred prior to the effective date, provide a copy to your closing agent and offer to purchase a new owner’s policy for your buyer. Be sure to ask about a reissue discount.
If you don’t have an owner’s title insurance policy or that isn't an option, you've got some work ahead.
The specifics of the corrective action depend on the problem, which could include: calling a bank or mortgage company, providing additional documentation, locating and contacting prior owners of the property or hiring legal counsel to complete a quiet title action.
Resolving the cloud may take a few hours from start to finish, or it could take weeks, months or even years.
Who pays to clear up the title?
You do! You are responsible for the cost of clearing any clouds on your title unless it is covered by your owner’s title insurance policy. The cost ranges from minimal (preparing and filing corrective documents) to excessive (filing a lawsuit).
Why is this happening?
Don’t take it personally. We know you did not intentionally cause the cloud on your title, and the closing/title agent is not trying to add stress to an already chaotic time.
Everyone involved has the same goal — to close the deal. Work with your closing/title agent and communicate regularly. He or she is there to help you.
Editor's note: This is an updated version of an article originally posted on November 10, 2014.
Have you ever experienced a problem with your home's title? Tell us about your experience in the comments section below.
About this Experts Contributor: Becky Schweitzer has been in the title industry for 16 years. Safe Title Agency, Inc. has been providing title services in Cincinnati, since 1976. You can follow this contributor on Twitter and Google+.
As of March 7, 2016, this service provider was highly rated on Angie's List. Ratings are subject to change based on consumer feedback, so check Angie's List for the most up-to-date reviews. The views expressed by this author do not necessarily reflect those of Angie's List.