Land and real estate are special types of assets, since they cannot be covert and they hold a great deal of value. As such, many banks and creditors find using real property as collateral to be the best way to ensure outstanding debts are eventually paid. By placing liens against property, those owed now own a part of the debtors’ real property equal to the debt owed, and they can force a sale in order to satisfy the debt.
Since buying a home is a huge financial commitment, it is pertinent that you are positive that you have exclusive rights to your would-be property before you make your purchase. In other words, you should have clear “title,” without what is referred to as “clouds” or “defects.” Titles in real estate are more like ideas than actual physical papers, like car titles. However, you can conduct a title search, which is a thorough record of any liens or other compromises to clear title, or 100% ownership.
While liens make up the vast majority of title encumbrances, they are far from the only barriers to perfect title. Easements, unpaid tax levies, and abandoned mortgages are other matters that can keep one from outright ownership of the real property that he or she has purchased. This is why title searches should be a critical part of buying a home if one wants to be sure that there are no unknown defects that can creep up on him or her in the future.
Here are many of the issues that a clouded title may have, though many have already been mentioned, that can be found during an exhaustive title search:
Heirs and Debts of Prior Owners that Died
When the previous owner of the home is a person that died while owning it, a title search should be able to determine if there are any heirs that are unaware of their status. In this case, it is also pertinent to determine whether or not the decedent left a will and if all estate taxes have been paid, as well as any creditors with a claim against the estate. It should also be determined whether or not succession proceeding have concluded.
A mortgage is a lien placed against a property to secure a loan that was provided to the buyer in order to purchase such property. Sometimes, a seller will sell a home to a new buyer, and will not use the money to pay his or her mortgage. This means that the bank will not release the mortgage and it will still exist as a lien against the property. This unpaid mortgage can result in a foreclosure on the real estate while the new buyer is living in the home.
Local Government Liens and Real Estate Taxes
A title search will reveal whether all local city or parish taxes are paid up to the current date. The local government can actually place a lien on your real property and take ownership if taxes are delinquent. However, if a previous owner fell behind and a lien was placed accordingly, this can cloud your title in the present.
In Louisiana, the state and its cities and parishes can also place liens on your home if services and other taxes remain unpaid. Some of these include unpaid income, sales, and inheritance taxes, unpaid weed and debris removal and demolition costs, and unpaid special assessment taxes, such as those used to improve the sewers and roads.
Mechanic Liens and Claims
Mechanic, or contractor, liens are used when those that dedicated their labor or materials to work on a home, such as a carpenters, plumbers, HVAC workers, or plumbers, have not been paid for a period in excess of 120 days. At this point, a lien can be placed without any courthouse proceeding, and they can foreclose on the real property. This is often referred to as a “secret lien” because no notice is required to be given to the homeowner. These liens do, however, show up on a title search.
Judgments and Ongoing Legal Matters
Besides foreclosures, other court proceedings, such as successions and lawsuits, can affect real estate title. A good title search will clue a potential buyer in on all he or she needs to know. The judgments in such circumstances are certain to affect the title, as well.
That said, there are other judgments from the past that can affect real estate title just as easily. Let’s say a former owner of the real property did not pay a previous debt, besides the mortgagor or a contractor, and he or she was brought to court for that reason. If the prior owner still refuses to pay after a judgment has been rendered against him or her, a lien can be placed against his or her real property and an execution sale can go forward. The proceeds will then pay the judgment. A title search will let the new buyer know if this is an issue.
Easements and Rights-of-Way
Easements and rights-of-way are usually a long-standing part of a property’s history. They are, basically, the rights of certain entities to pass along the property by those other than the owner. Many times this refers to the rights given to utility companies, but they can also refer to rights of neighbors that share a driveway or plant life.
Liens from the Federal Government
The federal government has the right to place liens on properties in order to levy and sell them in order to pay delinquent federal taxes. This can be done in the absence of any court proceeding and happens quite often.
Land use may sometimes be limited in some ways by what are known as deed covenants. For example, a home may have to be built a certain distance from the road, or a porch or patio may be prohibited. If a covenant goes unfollowed, the deed may revert back to the original owner. It is crucial that a buyer is aware of these restrictions, and, thankfully, they can be found during a title search.
In Louisiana, all land records are under the jurisdiction of the Clerk of the Court and are stored with him or her in each parish or city. We at Baton Rouge Process Servers know that most home buyers and realtors are too busy with the own daily lives and do not have the time to hang around the courthouse all day looking for a detailed chain of title for a given property. That is why we now offer title search services in which we will go to the courthouse and conduct your title search for you. To learn more, give us a call or shoot us an email and find out more about how we can help you with your title searching needs.