Buying residential real estate is a complicated and sometimes confusing process. People may not realize that what they buy is essentially the title rights to the property. The buyer records the deed they signed. That deed establishes them as the new owner of record for the property.
They can then use their title rights to secure a home equity line of credit or to leave a legacy for their loved ones after they die. Unfortunately, residential homeownership can be at risk in scenarios where there might be an outside party with an interest in the property.
What happens when an outside party claims to have an interest in a property?
Title disputes can quickly become expensive
Home buyers who financed their transactions typically have an obligation to purchase title insurance. In fact, their settlement statement at closing probably reflected the cost of not one but two separate title insurance premiums.
The buyer has to pay for coverage that protects the lender for the amount that they provided to finance the transaction. The buyer also has a policy protecting their interest in the property, including the down payment they made, the equity they accrued while making mortgage payments and any sweat equity related to improvements at the property.
If an outside party initiates a title claim, they could obtain ownership of the property. The title insurance of the current owner can help them pay to secure legal representation. People typically need an attorney to help respond to title disputes.
A lawyer begins the process by reviewing the basis of the title claim. Some people may believe they have a right to the property because they are an heir of the previous owner who did not receive notice of estate administration. Other times, the claimant might be the former spouse of the prior owner. Occasionally, the people making the title claim our individuals targeted by fraud who thought the deed they signed acquiring the property made them the legal owner of the property.
Depending on the circumstances, the attorney representing the owner can look for ways to refute the claim of the outside party and affirm the title rights of their clients. The judge makes the final determination.
If they rule in favor of the owner, then the owner can retain possession of the property. If they rule in favor of the plaintiff, the current owner may need to navigate a title insurance claim to recoup what they invested in the property. Title disputes can take months to resolve and can involve numerous challenging elements that most people cannot handle on their own behalf.
Securing the right support when responding to a title dispute can help people protect one of their most valuable resources. Title litigation may put someone’s interest in a property at risk if they don’t respond appropriately.