An unresolved title defect can block a sale, delay a closing, or trigger costly litigation. This guide explains how title defects affect real estate transactions. It also shows how property deeds fix title defects.
What is a title defect?
A title defect is a problem in the chain of title that makes property ownership unclear, unmarketable, or disputed. A title defect creates doubt about who owns the property or the extent of that ownership.
Title defects reduce a property’s value. Title defects do not resolve on their own, and they often become harder to fix over time. Defects still matter even if the owner has no plans to sell the property or buy title insurance.
Can a property have title defects even if the owner does not know about them?
Yes. Most property owners are unaware of title defects. State law requires county clerks to record any documents that meet recording requirements. The county clerk does not check these documents for title defects, only for recordability. A document that creates a title defect can be recorded and remain unnoticed in the land records for years.
The only way to determine if title is clear (free of defects) is to examine the chain of title. No one examines the chain of title without cause. Title examination usually occurs when an owner tries to refinance, sell, or transfer the property. It is at this time that title defects are most often discovered.
How does a title defect affect property value?
Title defects decrease property value. If the seller cannot convey “marketable title” (title a reasonable buyer would accept because no defect creates a significant risk of dispute or loss), underwriters will not insure title, lenders will not accept the property as collateral, and buyers lower offers or walk away. These effects drive down the property’s value.
What are the types of title defects?
There are ten main types of title defects, and each arises from a specific legal problem.
- Errors in the chain of title. Incorrect language, missing signatures, or improper notary acknowledgments break the chain.
- Unreleased liens or mortgages. When an owner pays off a loan secured by a mortgage, the lender should record a satisfaction or release to clear the lien. If the lender fails to release the lien, the lien creates a defect.
- Unpaid property taxes or assessments. Taxing authorities can impose liens against real estate for unpaid taxes. If a taxing authority files a lien in the land records and fails to release it, the lien creates a title defect.
- Heirs and probate issues. After an owner’s death, state law requires documents that establish who inherited the property. Unless state law offers an alternative to probate, this usually includes a court order identifying the new owners and resolving any credit claims. State law requires this step even if the deceased owner had a will.
- Unknown or missing heirs. A left-out heir may later claim the property; if no one completed probate or established heirs, a defect exists.
- Boundary or survey disputes. Overlapping lines, easements, or encroachments make ownership unclear.
- Forgery, fraud, or lack of authority. Forged or fraudulent documents cause defects. Defects also arise when someone signs without legal authority. For example, signing a deed for a corporation without corporate authority creates a defect.
- Errors in public records. When staff misindex or lose documents, the recorded chain can break and cause defects. Modern recording reduces these errors, but older deeds may still contain them.
- Divorce or marital property disputes. Many states require a spouse’s signature even if the chain of title does not list the spouse as an owner. If state law requires a spouse’s signature and no one obtains it, a defect results.
- Undisclosed restrictive covenants or easements. Restrictive covenants and easements can restrict an owner’s use of property. Recorded and disclosed encumbrances don’t usually make title unmarketable; undisclosed, mistaken, or invalid ones can. A defect can arise if no one properly discloses or extinguishes an old covenant or easement.
Each type requires ‘curative’ legal work to fix the defect before the title is marketable.
How are title defects discovered?
A title search usually uncovers defects when an owner tries to sell.
- The title company, attorney, or lender usually requests a title search to ensure marketable title. A title search is an examination of public land records to confirm who owns a piece of real estate and to uncover any title defects.
- The title examiner (or “abstractor”) reviews the chain of title. The chain of title is the sequence of recorded documents that determine ownership. It begins with the original property grant from the government and continues to the present owner. Each deed, probate transfer, court order, or other conveyance links together like a chain.
- The examiner flags each gap, error, or break as a defect that must be resolved to establish clear ownership. The examiner notes each defect on the title report and provides it to the person who requested it.
Title searches often uncover defects the owner never knew about—even after years or decades. Many sales stall or fail when a title search finds defects before closing.
How can I fix a title defect?
A title defect is fixed (“cured”) through deeds or releases. If a deed or release is inadequate due to the nature of the defect, a court proceeding may be required.
Curing Title Defects with Deeds or Releases
In some cases, recording a new deed clears the defect.
- Using quitclaim deeds to clear title defects. If ownership is uncertain but all potential owners agree, all potential owners sign a quitclaim deed releasing their interests to the agreed owner; that deed gives the grantee clear, marketable title.
- Using corrective deeds to clear title defects. The original parties execute a corrective deed to confirm the intended terms (legal description, names, signatures); once signed and recorded, it restores a clear, reliable chain of title.
Title professionals also use other signed documents to clear title without court involvement. If the defect is an unreleased lien, the closing attorney or title company contacts the lienholder to request a release.
Curing Title Defects with Court Proceedings
Some title defects can be cured only by a court order. Two types of court proceedings can resolve title defects:
- Probate proceedings to clear inherited title. If the defect involves a deceased owner or unknown heirs, probate or an alternative process may be needed to identify the heirs or beneficiaries.
- Quiet title action establish property ownership. A quiet title action establishes ownership by resolving competing claims. It requires all potential claimants to appear and assert their rights. The court’s judgment determines who holds valid title to the property.
Once the court enters judgment, it clears title and restores marketable ownership.
| Defect type | Typical cause | Standard cure | Who acts | Common document(s) |
|---|---|---|---|---|
| Errors in chain of title | Typos, wrong names, missing signatures, bad acknowledgments | Corrective deed or re-acknowledgment | Original parties, notary | Corrective Deed; Affidavit of Correction |
| Unreleased mortgage or lien | Paid loan not released of record | Record satisfaction/release | Lender; owner; title company | Satisfaction/Release of Mortgage; Lien Release |
| Unpaid taxes or assessments | Delinquent taxes; recorded tax lien | Pay balance; obtain and record release/redemption | Owner; tax authority; title company | Tax Lien Release; Certificate of Redemption |
| Heirs and probate issues | Owner died; heirs unclear | Probate or small-estate alternative; record court order | Personal representative; heirs; court | Letters Testamentary; Decree of Distribution |
| Unknown or missing heirs | Omitted heir later claims | Probate or quiet title after notice | Heirs; court | Order Determining Heirship; Quiet Title Judgment |
| Boundary or survey disputes | Encroachments; overlaps; easements | Boundary agreement; easement; lot-line adjustment; quiet title | Adjoining owners; surveyor; court | Boundary Line Agreement; Easement Grant; Judgment |
| Forgery, fraud, lack of authority | Forged deed; unauthorized signer | Quiet title; ratification; re-execution with authority | Corporation/owners; court | Corporate Resolution; Ratification; Quiet Title Judgment |
| Errors in public records | Misindexing; lost instrument | Re-record; certified copy; corrective filing | Recorder; owner; title company | Re-recorded Instrument; Affidavit of Lost Instrument |
| Divorce or marital property | Missing required spousal signature | Spousal joinder or post-transfer ratification; court decree | Spouse; owner; court | Spousal Joinder Deed; Interspousal Transfer Deed; Decree |
| Undisclosed covenants/easements | Old restriction or easement not cleared | Release, termination, estoppel, or quiet title | Benefited party; owner; court | Release of Restrictive Covenant; Easement Termination; Judgment |
What deed should I use if there’s a defect?
If a grantor either knows that there are title defects or is unsure about them, the grantor should use a quitclaim deed (or, in states that disfavor quitclaim deeds, a no-warranty deed).
A quitclaim deed provides no warranty of title. It transfers the grantor’s interest to the grantee “as is,” with the grantee assuming the risk of title defects. If the grantee later discovers a defect, the grantee cannot compel the grantor to fix it. That is true even if the defect shows the grantor never owned the property and therefore conveyed nothing to the grantee.
Other deed types (such as a general warranty deed or special warranty deed) include a warranty of title. A warranty of title protects the grantee by making the grantor legally responsible for title defects.
In practice, a grantor’s willingness to accept the risk of title defects turns on whether the grantee pays the grantor for the property. In a sale, the grantor usually signs a warranty, special warranty, or grant deed. If the grantor makes a gift (no consideration), the grantor usually signs a quitclaim deed or gift deed.