We purchase assets to make investments. Most of the tangible assets are depreciating. However, land is the only asset that appreciates in the long term. Whether for a new house, a business venture, or just to hold as an asset, buying land can be an exciting investment. Notably, carrying out a comprehensive land title verification is one of the most crucial stages in this procedure. The purpose is to find anything that could compromise the land's ownership or transferability.
Unfortunately, you may encounter multiple challenges during the process that could make the deal more problematic. Therefore, we will discuss some of the problems that buyers and sellers run into when completing a successful property transaction in this piece.
5 Common Issues Found in Land Title Verification
Below, we have listed and described some of the most frequent challenges you may face during land title verification and how they can impact the transaction negatively.
Unpaid Liens
Unresolved liens are one of the most frequent problems faced during a land title search. Usually resulting from unpaid debts like mortgages, taxes, or contractor fees, a lien is a legal claim made against the property. They have the potential to halt or even ruin the land purchase transaction. If the land is subject to a lien, the creditor has the right to receive a share of the sale proceeds to pay off the remaining debt.
In this case, buyers hesitate to proceed with the transaction. They don't want to take on the debts of the previous owner. Hence, it is essential to resolve the liens. Lien resolution generally means paying the outstanding balance or engaging in time-consuming and expensive negotiations with the creditors to dismiss the claims.
Disparities in Boundaries
When there is a difference between the land's actual borders and the legal description found in the title documents, boundary discrepancies arise. These discrepancies may result from inaccurate previous surveys, altered topography, or unrecorded agreements with nearby property owners.
Boundary disputes can affect your ability to use the land as intended, lower the value of the property, and result in legal disputes with neighbours. Therefore, precise boundary descriptions are essential. Establishing precise boundaries, settling disagreements, and determining the precise dimensions and location of the property you are purchasing are all beneficial.
Rights of Way and Easements
Rights of way and easements are also some of the often challenges you may encounter during land title searches. An easement is a legally recognized permission given to a third party to use a portion of land for a designated use, like pipelines, access roads, or utility lines. These rights may be established by continuous use or may be stated in the title.
Although rights of way and easements can be favourable and necessary, they can also limit the usage of your property. For example, in areas where an easement exists, you might not be allowed to build structures or make notable changes. Planning your land use and averting possible disputes with third parties depends on how much you know about the existence and extent of these rights.
Issues with Previous Ownership Claims
Challenges with prior ownership claims may also come to light during a land title verification. These issues occur when there are conflicting claims to land ownership due to fraudulent transactions in the property's past, incomplete or inaccurate documentation, or inheritance disputes.
If ownership disputes do not get settled, they may give rise to legal challenges and possibly result in property or financial losses. Therefore, a smooth land purchase requires explicit and clear ownership. To safeguard your investment, ensure the title search comprehensively checks the ownership chain and settles any disagreements.
Unknown Encumbrances
Encumbrances are the legal constraints or liabilities placed on a property that may have an impact on its value. These may include unpaid Owners Corporation dues, zoning restrictions, etc. Unexpected restrictions on your ability to use the land can be a prominent issue with undisclosed encumbrances.
After the purchase, they may result in severe challenges like construction limitations, altered land use, or increased financial obligations. Finding these encumbrances during the land title search enables you to take care of them before you complete the transaction. It ensures you acknowledge and understand all requirements and can adhere to them.
Conclusion
Every land purchase process must begin with a thorough land title search. You can avert potential problems before they ruin your deal by recognizing common issues like unpaid liens, boundary disputes, easements and rights of way, prior ownership claims, and unknown encumbrances.
