Spring Title Issues: 5 Problems That Can Derail an Illinois Closing

Spring title issues can delay or even derail the closing process, leaving real estate deals in limbo. Based on data from the National Association of REALTORS, 14% of closings are delayed and 6% are terminated altogether.

Title issues, such as document errors and liens, can put real estate deals at risk. To ensure smooth and timely closings, real estate agents must understand common title pitfalls and how to avoid them. Here are the top five Illinois title issues that can delay or derail property transactions. 

1. Who Really Owns the Property?

The emergence of unknown heirs can cause disputes over property ownership rights before closing. If a property is inherited, issues arise when all heirs cannot be found, or the property is not properly accounted for. These heirs can lay claim to the property by pursuing a legal battle against the seller, thereby delaying the transaction.

Realtors can avoid this problem by encouraging sellers to conduct a thorough title search before listing the property. When properly conducted, a title search can reveal claims by undiscovered heirs. For properties with a complex ownership history, a pre-listing title review can be a lifesaver. It can help identify potential issues and heirs before closing.

2. Unclear Property Boundary Lines

Unresolved boundary issues can lead multiple parties to claim a single property. Often discovered during zoning or title reviews, these issues include encroaching driveways, fences, or disputed property lines. Boundary issues often arise in the spring, when people spend more time outdoors.

In some cases, adverse possession allows a person to acquire legal title to land by using it for an extended period without the owner's permission. Costly delays of the transaction may arise if such parties lay claim to the property.

A title search can help realtors identify potential claims that could lead to future disputes. To avoid delays, a recent property survey should be obtained, and any discrepancies should be resolved as early as possible. 

3. Your Property is Now an Easement

Easements limit what a new owner can do with a property. They allow other parties to use parts of the property for specific purposes, such as utility access. The buyer may not be able to use the property as intended. Buyers may be reluctant to complete the deal if they discover these limits at closing. In some cases, they may even pursue legal action if the discovery is made after the deal is closed.

Realtors can use a title search to uncover any restrictions or easements before closing. They can share this information with the buyer and negotiate suitable terms before closing.

4. Outstanding Judgments, Contractor Liens & Unpaid Property Taxes

A lien is an outstanding obligation attached to a property. Outstanding judgments, contractor liens, and unpaid property taxes in Illinois are among the debts that must be paid by the seller before the sale of a property. The buyer is barred from taking legal ownership of the property until these obligations are cleared. These issues can significantly delay the deal.

A comprehensive title search can identify any hidden judgments and liens that can affect real estate deals. Any issues uncovered should be resolved as soon as possible.

5. Forged Signatures, Identity Theft & Other Document Issues

Forged signatures, identity theft, fraudulent transactions, and clerical or recording errors can further complicate or even derail property transactions. If someone challenges the validity of past property ownership based on any of these issues, the current deal may be at risk. Resolving these issues takes significant time and resources.

Realtors should conduct a thorough title search process in Illinois to uncover any fraud-related issues. Afterward, they can work with legal professionals and authorities to resolve the issues before closing. Lenders and buyers can protect themselves from these title defects in Illinois with title insurance.  

Protect Yourself from These Spring Title Issues Through Owners’ Title Insurance

A property title proves ownership of real estate and demonstrates the owner's rights regarding the property. Title issues can render any transaction involving the property invalid. The closing process is a complicated and stressful part of the property transaction. Simple mistakes can delay or halt real estate deals.  

Everyone involved in the property transaction, including the realtor, buyer, and seller, should work closely together to identify and resolve any issues before closing. Realtors looking to avoid spring title issues should always stress the importance of conducting a comprehensive title search early. They should also encourage their clients to secure title insurance for added protection. 

Looking to conduct a seamless real estate transaction? Contact the Chicagoland title insurance and escrow team at Plymouth Title Guaranty Corporation.