Orlando is considered one of the best cities for retirement, one of the hottest construction markets in the country, a top city for foodies, and ranked higher than other real estate marketing for housing. All of these positives can have you wanting to buy real estate in this high-demand market. However, before you jump in with both feet and start making title transfers, you need to know what you are investing in.
Take a step back and ask these questions before signing any contracts.
1. Are There Any Encumbrances?
While a deed transfers property ownership, this doesn’t always mean you own the property free and clear. An encumbrance is when someone else has an ownership claim to the property. This could be a tax lien, mortgage, or easement.
Liens and mortgages are easier to find because they are typically recorded. Easements can be slightly more challenging to discover. An easement can go unrecorded, and there never be an official agreement in place. It can occur naturally over time as a property owner allows another party to use their property. As the new owner, you may find yourself forced to comply with the previously established easement.
2. Is It a Good Title?
Each transfer of ownership for a property needs to be recorded. This is done at the County Recorder’s office. Title transfers become a part of the public record to put the world on notice that a piece of real estate has a new owner. Failure to correctly record the new ownership results in gaps or holes in the property’s history. This can present a risk to you, the new buyer. There can be a question about whether or not you are the rightful owner because there’s a question about whether the seller had the rightful authority to sell the property.
For example, you buy a piece of property from the current owner without having a full title history search done. Or you have one done and ignore a gap in the history. A year or two later, you discover that there’s another rightful owner to the property. Now your investment is at risk, and you may lose ownership of the property.
3. What Type of Deed Will You Use?
The deed is the legal document that transfers the ownership of the property. Four types of deeds in Florida get used to transfer real estate ownership in Florida. A quit claim deed makes no promises or guarantees of legal and rightful ownership. It should only be used when you have trust and confidence in the current owner. It’s typically used when transferring ownership between friends and family members.
A general warranty deed is the most common type of deed used in Florida. This gives the buyer a complete and full warranty of the title. This type of deed gives you the most comprehensive protection. A special warranty deed will provide a limited warranty against third parties making a claim to the title.
4. Should You Purchase Title Insurance?
If you are purchasing the property with the assistance of a lender, then you may have no choice in the matter. However, you may want to look beyond the lender’s requirements. There are two types of title insurance, owners and lenders. One protects you, the buyer, the other protects the lender.
Having title insurance becomes important if there is a problem with the title discovered in the search. The insurance company will provide financial and legal assistance should there be a valid claim. You can buy title insurance to protect the property for as long as you want.
5. How Do I Resolve Title Issues?
Some issues will naturally work themselves out. For example, a tax lien or mortgage may naturally go away as the sale proceeds will absolve these encumbrances. However, you’ll want to confirm this and have it specially outlined in your contract. Other issues may only require a simple adjustment to your contract. You may take no issue with a newly discovered easement but want it officially memorialized to prevent discourse in the future.
Other title issues may require more effort to resolve. Some can take several months or even years to resolve as it works its way through the legal system. If multiple parties claim ownership, it may require a court hearing and a judge to rule on the matter. You’ll want to wait until all of these claims are addressed before moving forward with the purchase.
Title Transfers Done Right
As you can see, there’s more that goes into purchasing property than simply making an offer and signing a contract. Before you complete a title transfer, you’ll want to ask these questions. It can also help to speak with an experienced attorney who understands the complexities of real estate law in Florida.
Schedule a consultation with one of our skilled attorneys to discuss your potential file transfer.
