By Lydia Blair
When you buy a home, don’t you get a guarantee of clear title? Well … no.
Isn’t that why you buy a property through a title company and get title insurance? To get clear title? Not exactly.
That’s not the phrase we like to use in the title business. Those two words “clear” and “title” together. They can cause anyone within the walls of a title agency to cringe, squirm and scowl. It’s like nails on a chalkboard.
I had the audacity to use the expression “clear title” in a recent Title Tip. Just pin my tail and call me a donkey. Must have been too much holiday eggnog.
So how do you get clear title to a property? You don’t.
Let me clarify. Title agencies do extensive searches on a property before they close the transaction. If the property meets all the criteria, they close the deal and issue title insurance. But they don’t promise you clear title.
Just like fire insurance doesn’t guarantee you’ll never have a fire, and flood insurance doesn’t guarantee against a flood, title insurance doesn’t guarantee you’ll never have a claim against the property. Like other insurances, it promises to cover your losses up to the value of your insurance if a problem occurs that you are insured for.
Holding title to your property and getting title insurance does not guarantees that the title is completely and clearly free of any and all defects or encumbrances. It doesn’t mean that someone, someday won’t pop up claiming that they have ownership or a lien on the property.
Getting a title insurance policy means we didn’t find defects and encumbrances on the title that would make it uninsurable. Obviously, title agencies want to do a complete search for all potential issues because they’d rather not pay claims that could arise if they didn’t. And issues do arise.
Claims paid out by title agencies can be very expensive. And they happen every day. Even the most diligent property searches don’t always reveal every person or entity that has a claim – or thinks they have a claim – to a property.
I have yet to see a piece of land that has been owned by the same person since the beginning of time and couldn’t have a possible undisclosed lien, unknown heir, hidden defect, etc. I can’t promise with absolute certainty that any title is clear and flawless. And neither should anyone else.
Often buyers will be told a property is “clear to close.” There’s that word ‘clear’ again. It just means there are no obstacles left to close the transaction. The title agency is happy enough with the title search to issue title insurance on the property and finalize the sale.
Hopefully, this makes the question of title to your property a little clearer.
The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.
Lydia Blair (formerly Lydia Player) was a successful Realtor for 10 years before jumping to the title side of the business in 2015. Prior to selling real estate, she bought, remodeled and sold homes (before house flipping was an expression). She’s been through the real estate closing process countless times as either a buyer, a seller, a Realtor, and an Escrow Officer. As an Escrow Officer for Carlisle Title, she likes solving problems and cutting through red tape. The most fun part of her job is handing people keys or a check.