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How can a title defect hurt your business?
March 9, 2023
As a business owner, the title of your property is often one of the most important things for you to protect. Whether you bought or inherited the property, understanding what a title defect is and how it can affect your business is essential.
It can lead to all sorts of financial losses, legal issues and even complete loss of ownership. Knowing the types of defects that can occur in titles and ways to identify them will help you protect yourself and prevent any unnecessary associated risks or expenses.
What is a title defect?
A title defect is any issue or problem associated with a property’s ownership that could threaten the owner’s full right or claim to sell the property. This means there is a publicly-recorded issue with the property, such as an unresolved boundary dispute, liens for unpaid debts, outstanding contracts, covenants, judgments, or mortgages that make transferring ownership to another person impossible.
If you’re a business owner looking to purchase property with a defective title, you may be unable to obtain financing or even complete the transaction. On the other hand, if you’re trying to sell a property with a defective title, you may struggle to find buyers willing to take on the risk and uncertainty of resolving the title defect.
Obtaining title insurance is one of the most effective ways to protect yourself against title defects. This type of insurance policy provides coverage for losses resulting from defects in the title to real estate.
When dealing with potential title defects, it’s essential towork with experienced professionalswho can help you navigate the process effectively. That way, you can be confident in a successful resolution and complete your transaction securely and efficiently.