Problems with deeds, titles, plats and surveys can cause issues for the sale of your home. To sell your house, your Deed must be free of certain encumbrances. These include taxes, assessments, homeowner association fees (unpaid), mortgages and second mortgages, mechanics liens, and judgement liens. For the deed to be passed on to a buyer, those encumbrances must be paid.
Your lawyer will research your title to make sure it is clear for closing. If it is not, he will let you know about any liens recorded against your deed that will need to be paid at closing. To help you assess your profits in the sale of your home, it is valuable to have this information at the beginning. If you are unsure whether there are second mortgages or mechanics liens on your home, please let your agent know so they can do some research before you list your home for sale.
Generally, earlier recorded liens have higher priority over liens recorded at a later date. But, liens for taxes, assessments, and homeowner association fees have the highest priority, regardless of when they were recorded.
Types of Deeds:
General Warranty Deed: The best of all types of deeds and used the most. The property is guaranteed by the grantor to hold no encumbrances.
Quit Claim Deed: Usually used when one spouse is handing over ownership to the other, these deeds provide no guarantees about judgments held on the property.
Special/Limited Warranty Deed: This deed simply states that at the time of the sale, the grantor was not aware of any liens or encumbrances on the property.
Contract for deed, land contract or installment agreement: This is used for seller financing.
Deed of Trust: This is a mortgage company’s claim to your home.
Mechanic’s Liens and Judgement Liens
A mechanic’s lien is a security interest in the title on a property for the benefit of those who have supplied labor or materials that have improved the property. The lien exists for both real property and personal property. The claim of lien relates to and takes effect retroactively to the time of the first furnishing of labor or materials. The contractor has 120 days to file his claim from the last point he/she furnished labor or materials, then 180 days to take action to enforce.
A judgement lien is awarded by the court in a civil lawsuit and can remain attached to real estate for 10 years. It is money owed to a creditor.
An encroachment is also an encumbrance. It is an extension of some physical structure, such as a building, driveway, fence, or tree over a property line from an adjoining property. Encroachments can affect the marketing of the title, and should be noted in a listing agreement or sales contract.
Plats | Surveys
Plats are usually drawn at the time a large piece of land has been subdivided. This is when a neighborhood is given its name. A survey on the other hand is usually drawn with improvements (buildings) on the land and includes outside dimensions of the buildings, dimensions and placements of boundaries set by rebar, iron pipes, cut crosses or cotton spindles and any physical encroachments to the property.