How to navigate the title pitfalls of rental properties
BY
Anywhere Integrated Services
.
March 11, 2025
Your clients are interested in creating their own small real estate portfolio. You can hear the anticipation in their voice for you to make the purchase of their investment property as smooth as possible and the start of a worthwhile investment. Sometimes the investment property may even be an out-of-state purchase. Guiding your clients through the process of purchasing a rental property out of state can be both rewarding and challenging. One of the critical aspects of this journey is ensuring that the property's title is clear and free of issues.
Here, we'll look at some common title issues that buyers may encounter and emphasize the crucial role our team of title professionals plays in this process.
Common Title Issues in Out-of-State Property Purchases
- Errors in Public Records - Clerical mistakes or inaccuracies in public records, such as misspelled names or incorrect property descriptions, can create confusion about ownership and may require legal intervention to resolve.
- Outstanding Liens - Unpaid debts or taxes from previous owners can result in liens against the property. These liens must be resolved before the property can be transferred to your client.
- Boundary Disputes - Unclear or contested property lines can lead to disputes with neighbors or public entities. It's important to have a current property survey to confirm the boundaries.
- Illegal Deeds - Previous owners may have documented their title illegally, such as including an undocumented immigrant, a minor, or a person of unsound mind. This can complicate the transfer of ownership.
- Undisclosed Heirs - If a property was inherited, there may be undisclosed heirs who could claim ownership rights, leading to potential legal battles.
- Forgery and Fraud - Instances of forged documents or fraudulent claims can jeopardize your client's ownership. Title insurance can help protect against these risks.
- Unpaid Property Taxes - Sellers may fail to disclose unpaid property taxes, which can become your client's responsibility if not identified and resolved before closing.
- Easements and Encumbrances - Easements allow others to use the property for specific purposes, such as utility access. These can limit how the property is used and should be identified during the title search.
The Role of the Title Company
Our dedicated team of title experts plays a pivotal role in facilitating clear title. Here’s what we typically handle:
- Conducting a Title Search - We perform a comprehensive title search to verify the legal ownership of the property and uncover any potential issues or claims that may affect the transaction. This includes examining public records, deeds, mortgages, liens, and other relevant documents.
- Providing Title Insurance - Title insurance protects your client from financial losses due to defects or issues with the property's title. It covers legal fees and other costs associated with resolving title issues, ensuring your client's ownership is protected.
- Facilitating the Closing Process - We facilitate the transfer of property ownership from the seller to the buyer. We make sure all necessary documents are signed, funds are properly disbursed, and the transaction is completed smoothly.
- Resolving Title Issues - If any title issues are discovered during the search, we work to resolve them before closing. This may involve clearing liens, correcting public record errors, or addressing boundary disputes.
Your role in assisting buyers with a rental property purchase is invaluable. By understanding common title issues and leveraging our title expertise, you can help ensure a smooth and successful transaction for your clients and get those keys into their hands.
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This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice. The material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. Intended for distribution to only one per individual for marketing purposes only on behalf of our company. Not for reproduction.
