What happens if a title defect is discovered?

If a title defect is discovered when purchasing a property in Texas, it is important to understand how the title defect may affect the purchase or sale of the property. Title defects can range from errors in the chain of title, the document that tracks ownership of a property, to faulty surveys that do not properly define the exact boundaries of the property. Depending on the severity of the title defect, it may be cause for the transaction to be voided or renegotiated. The most common type of title defect is an “encumbrance”, which is a right to the property or a burden upon it. An encumbrance can be a lien or loan secured by the property, or a rightful claim to some part of the property by a third party. However, it is possible for the title company to issue a title insurance policy without having to list such encumbrances. If an encumbrance is discovered after the title insurance policy is issued, it may be possible to get a new title insurance policy that lists the encumbrance, although the cost of the new policy may be higher. In Texas, if a title defect is discovered in the chain of title, then it is the responsibility of the seller to correct the defect in order to complete the sale of the property. However, if the seller fails to do so, the buyer can pursue legal action, such as canceling the contract or suing for damages. In these cases, a court may determine that either the buyer or the seller is due payment, or that the contract should be voided.

Related FAQs

What is the Statute of Limitations for filing a property lawsuit?
What is adverse possession?
What is a deed of release?
What is a lien?
What is an encroachments clause?
What is title search?
What happens if the mortgage is not paid?
What is a deed of gift?
What is a lease with an option to buy?
What is the difference between an easement appurtenant and an easement in gross?

What happens if a title defect is discovered?

Related FAQs

Related Blog Posts