Common Title Issues That Can Delay Spring Closings (and How to Avoid Them)

Spring is one of the busiest seasons for real estate transactions. With higher transaction volumes, even minor title issues can cause major delays, leading to missed closing dates and lost deals. Identifying and addressing these problems early can save realtors, buyers, and sellers significant time and stress. Here are some common title issues that can delay a spring closing and how to avoid them.

1. Unresolved Liens or Judgments

A property may have unpaid debts attached to it, such as tax liens, contractor liens, or outstanding judgments. These must be cleared before the property can be sold. Liens represent a claim against the property for unpaid obligations and must be resolved by the seller before closing. If these issues are not cleared, the buyer cannot take ownership of the property until the debts are satisfied, leading to significant delays or a halted transaction.

How to Avoid It: Buyers should request a title search to uncover any existing liens or judgments that could affect the transaction. Sellers may want to consider a pre-listing title review if the property has a complex history to help resolve potential issues in advance, preventing delays later in the process.

2. Errors in Public Records

Clerical mistakes or missing information in deeds, tax records, or previous title transfers can create obstacles during closing. Even small discrepancies, such as misspelled names, incorrect property descriptions, or outdated addresses, can result in delays because they prevent the title from being deemed clear and marketable. These errors need to be corrected before the property can change hands.

How to Avoid It: Working with an experienced title agency ensures that records are thoroughly reviewed and corrected before closing begins. A title agency can identify and rectify errors in public records, ensuring the documents are accurate and up to date, allowing the closing process to proceed smoothly.

3. Undisclosed or Missing Heirs

If a property was inherited, there could be unknown heirs or disputes over rightful ownership. This can lead to legal complications, as the title to the property may not be fully clear if not all heirs have been identified or properly accounted for. If a seller is unaware of these heirs, it could result in a legal battle or the discovery of an heir claiming ownership just before closing, delaying the transfer.

How to Avoid It: Encourage sellers to confirm ownership and legal standing before listing. A title search can reveal any potential claims from missing heirs. Sellers may want to consider a pre-listing title review for properties with complex ownership histories, such as those inherited. This step can help uncover any undisclosed heirs or potential disputes early, saving time during the closing process.

4. Boundary and Survey Disputes

Neighbors or previous owners may dispute property lines, especially if fences, driveways, or structures encroach on another property. These issues often come to light in the spring when outdoor spaces are used more frequently, and landscaping projects begin. In some cases, a neighbor may claim ownership of part of the property through adverse possession, a legal doctrine that allows someone to gain ownership of land by openly using it for a long period of time without the owner's permission. If the neighbor has been using the land for a specified number of years (depending on state law), they may be able to assert legal ownership, which can significantly complicate a transaction.

How to Avoid It: Obtain a recent property survey and address any discrepancies early in the process. If there are disputes about property lines, including any claims of adverse possession, resolve them with neighboring property owners or through legal counsel well before the closing date. A title search can uncover any existing claims to the property that could lead to future disputes. By addressing boundary issues and potential adverse possession claims early on, you’ll reduce the chances of surprises arising just before closing, which can lead to costly delays or even litigation.

5. Unpaid HOA Fees or Violations

Properties in homeowners’ associations (HOAs) may have unpaid dues or unresolved violations that must be settled before closing. Spring is a common time for HOAs to conduct inspections and enforce community standards, which can bring up new compliance issues right before closing. Issues like unpaid fees or unresolved violations (e.g., failure to maintain the property according to HOA guidelines) can delay closing until they are addressed.

How to Avoid It: Request an HOA status letter or estoppel certificate early to confirm there are no outstanding fees or compliance issues. Sellers should address any unpaid fees or violations with the HOA well in advance. If violations are found, having a plan to correct them before closing is crucial to avoid delays.

6. Undiscovered Easements or Restrictions

Easements allow other parties to use portions of a property for specific purposes, such as utility access, and may limit what the new owner can do with the land. These easements can affect the buyer's plans for the property, especially if they limit construction or development options. If not disclosed properly, the buyer may find out about these restrictions only after closing, leading to dissatisfaction or even legal challenges.

How to Avoid It: A title search will reveal any existing easements or restrictions so buyers can be informed before closing. It’s important for both sellers and buyers to understand the full scope of these rights, and addressing them during the negotiation phase can prevent later complications. If needed, the buyer and seller can renegotiate terms or resolve disputes over easements before closing.

7. Fraudulent or Forged Documents

Past fraudulent transactions, identity theft, or forged signatures on previous deeds can create title complications that must be resolved before transferring ownership. If fraudulent activities were involved in the chain of title, the current sale could be at risk, especially if someone challenges the validity of past deeds or ownership transfers. These issues can be time-consuming and costly to resolve, sometimes delaying the closing by weeks or months.

How to Avoid It: Title insurance protects buyers and lenders from fraud-related title defects. A thorough title examination can also help detect these issues early. If fraudulent or forged documents are uncovered, it’s important to involve legal counsel and the relevant authorities to resolve the issue, which could take time to sort out, causing a delay.

The Importance of Title Searches and Title Insurance

Realtors can help clients avoid these common pitfalls by emphasizing the importance of an early title search and recommending title insurance for added protection. A professional title agency ensures these issues are identified and resolved before they disrupt the closing timeline. By tackling potential issues ahead of time, everyone involved in the transaction—buyers, sellers, and realtors—can avoid unnecessary delays and ensure a smoother, more efficient closing.

At Clover Lane Settlement Services, we handle all legal and title issues, ensuring that your transactions stay on track. Our team works proactively to identify and resolve potential problems before they impact closing dates. If you’re preparing for a busy spring market, contact us to provide your clients with the smoothest closing experience possible.