Clearing a Title for Real Property: The Common Oversights

When buying or selling real estate, clearing the title is a crucial step in the process. The responsibility of verifying ownership and claims to the property falls on the abstractors and examiners who review a variety of ownership agreements and legal documents. However, even with their expertise, there are common oversights that can lead to costly errors and omissions (E&O) claims.

Here are some of the most common oversights we see in E&O claims:

1. Family Homes: Property rights transfer within a family for a variety of reasons, such as inheritance, gifts, or divorce settlements. However, identifying who truly owns the property can be a challenge, especially when laws vary from state to state. Failure to notice a missing signature or to contact other family members with rights passed by a divorce proceeding can lead to a long and expensive legal battle.
2. Easements: An easement is a right granted to a person or entity to use the property for a specific purpose, such as access to a shared driveway or utility lines. Failure to identify an easement on a property can be costly. The property value can be drastically reduced depending on the restrictions enforced, and buyers of the property could request to be repaid due to the oversight.
3. Liens: A lien is a legal claim on a property for unpaid debts, such as taxes, mortgage, or contractor fees. Failure to include a lien at closing can initiate a foreclosure on the property, and the title agency could be responsible for the total amount due to satisfy the lien.

Abstractors and examiners are especially at risk for E&O claims. However, implementing current technology can assist in the accuracy of document discovery, and communicating important details or questions with clients can help verify the information is complete.

Clearing a title for real property is a complex process that requires attention to detail. Knowing common oversights, using technology, and communicating with clients can prevent costly E&O claims.

At TIAC, we understand the importance of protecting independent abstractors and title agencies. We have been in the industry for over 30 years, providing reliable E&O insurance coverage for those in the real estate industry. If you have any questions or concerns, please contact us for a quick review and estimate of your insurance needs.