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What is the difference between title defects and encumbrances?

On Behalf of | Jul 31, 2023 | Real Estate

Owning property typically comes with various obligations, including maintenance and recordkeeping. Fulfilling these duties could help address issues even before they become significant problems.

However, some might be concealed until complications arise, including title defects and encumbrances. Both could be problematic, depending on the circumstances. However, these property-related issues have district differences, potentially affecting how to address them appropriately. They differ from one another according to the following:

  • Title defects are issues concerning the property’s title. These issues could cause ownership impairments. Defects could happen due to record errors, forgery, identical owner details, fraud, inaccurate information and other problems. Unique circumstances could also lead to title defects, such as undisclosed inheritors who could claim rights to the property’s ownership.
  • Encumbrances are other claims made by others, including individuals or entities. For example, local organizations or agencies could claim limited rights to the property to serve their function to the public, including the property owner.

Knowing the type of ownership issue is vital before taking any legal action. Getting legal advice could help clarify the situation and determine the next appropriate step, whether a title defect or encumbrance.

Encountering property-related issues

Property sellers and buyers usually do their due diligence before proceeding with any transaction. Additionally, buyers might borrow money to make the purchase. If so, lenders typically ask for proof that the title and property are free of defects or encumbrances that could pose financial risks.

Unfortunately, some hiccups might remain undetected despite efforts to research and examine a property. It might be impossible to remove the risks of facing complications as a property owner; various options exist to address these problems based on the situation.

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