A Good Deal Can Still Stop at Title
Diana KhanPro Member
Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 403 posts · 162 votesIn my work as a Maryland real estate attorney, I have seen transactions slow down because an ownership issue, old lien, or estate problem was discovered later than anyone expected. By that point, the buyer may already have financing lined up, inspections completed, and a closing date on the calendar.
The problem is that having a signed contract does not automatically mean the seller can legally transfer clear title.
A title search can uncover things like an old mortgage that was never released, unpaid taxes or liens, errors in a prior deed, missing heirs, or questions about who actually has the legal right to sell the property. Some of these issues are fairly simple to clear up. Others can take much more time, especially when an estate or ownership dispute is involved.
That is why I think title work should start as early as possible. Confirm who actually owns the property, make sure the person signing has the authority to sell it, and give yourself time to deal with any liens or estate issues before the final week of the transaction.
A good purchase price and strong numbers are important, but they do not matter much if the property cannot be transferred when everyone expects it to.
For investors who have been through closings, what title issue has surprised you the most during a deal?
The title issues that surprise people most are usually the ones where everybody assumes ownership is obvious because possession is obvious.
Someone has lived there for 20 years.
Someone has been paying the taxes.
Someone has been collecting the rent.
Someone signed the listing agreement.
None of that necessarily answers the legal question:
Who has authority to convey the property today?
Estate situations are probably the cleanest example.
You can have a perfectly cooperative family, a buyer ready to close, a lender ready to fund, and then discover that the person everyone thought could sign either was never appointed properly, does not have the authority everyone assumed, or is only one piece of a larger ownership chain.
That turns a real-estate problem into a probate problem.
And probate does not care about your closing date.
Old unreleased mortgages are another good one because they expose the difference between economic reality and record reality.
Everybody may agree the loan was paid off years ago.
The seller may even have documentation showing that.
But if the release was never properly recorded, the title file still has to be cleaned up.
Same with old judgments, municipal liens, prior spouses, bad legal descriptions, deed errors and improperly handled transfers.
The thing I think investors sometimes miss is that title risk is really timeline risk before it becomes legal risk.
A lot of these problems are solvable.
The problem is that “solvable” and “solvable by Friday” are completely different things.
If your financing commitment expires, your rate lock expires, your 1031 clock is running, your contractor is scheduled, or you have another closing dependent on this one, the title defect can create economic damage even if everybody ultimately fixes it.
That’s why I like your point about starting the work early.
I’d take it one step further on unusual deals.
If I'm looking at probate, tax sale, inherited property, divorce, an entity with multiple members, a seller signing under POA, or anything where the ownership chain looks remotely interesting, I want to understand authority before spending heavily on the rest of the transaction.
There’s no great prize for getting the inspection, appraisal and loan approval done first and then discovering the seller cannot presently deliver the thing you’re buying.
I also think investors should distinguish between:
“There is a title problem.”
and
“There is a title problem I don’t understand.”
The second one is where people make bad decisions.
An old lien with a clear payoff path may just be paperwork and time.
A missing heir nobody can locate is a very different risk.
A deed defect with a cooperative prior owner is different from one involving someone deceased or hostile.
The headline issue matters less than the path to cure.
So one question I’d add when title finds something is:
What exactly has to happen for this defect to be cleared, who has to cooperate, and how much of that process is within our control?
That usually tells you whether you have an inconvenience or a deal killer.
And for investors buying distressed property, I’d probably move title diligence even farther forward than a normal retail buyer would.
The cheaper and messier the deal looks, the more I assume some of the discount may be compensation for a problem I haven’t found yet.
Sometimes that problem is the roof.
Sometimes it is the foundation.
Sometimes it is a dead person who still owns 25% of the property.
The last one is harder to fix with a contractor.
In my work as a Maryland real estate attorney, I have seen transactions slow down because an ownership issue, old lien, or estate problem was discovered later than anyone expected. By that point, the buyer may already have financing lined up, inspections completed, and a closing date on the calendar.
The problem is that having a signed contract does not automatically mean the seller can legally transfer clear title.
A title search can uncover things like an old mortgage that was never released, unpaid taxes or liens, errors in a prior deed, missing heirs, or questions about who actually has the legal right to sell the property. Some of these issues are fairly simple to clear up. Others can take much more time, especially when an estate or ownership dispute is involved.
That is why I think title work should start as early as possible. Confirm who actually owns the property, make sure the person signing has the authority to sell it, and give yourself time to deal with any liens or estate issues before the final week of the transaction.
A good purchase price and strong numbers are important, but they do not matter much if the property cannot be transferred when everyone expects it to.
For investors who have been through closings, what title issue has surprised you the most during a deal?
What you also need to inspect is what is excluded in schedule B in a policy which materially affects your ability to file a claim and get accepted.
In my work as a Maryland real estate attorney, I have seen transactions slow down because an ownership issue, old lien, or estate problem was discovered later than anyone expected. By that point, the buyer may already have financing lined up, inspections completed, and a closing date on the calendar.
The problem is that having a signed contract does not automatically mean the seller can legally transfer clear title.
A title search can uncover things like an old mortgage that was never released, unpaid taxes or liens, errors in a prior deed, missing heirs, or questions about who actually has the legal right to sell the property. Some of these issues are fairly simple to clear up. Others can take much more time, especially when an estate or ownership dispute is involved.
That is why I think title work should start as early as possible. Confirm who actually owns the property, make sure the person signing has the authority to sell it, and give yourself time to deal with any liens or estate issues before the final week of the transaction.
A good purchase price and strong numbers are important, but they do not matter much if the property cannot be transferred when everyone expects it to.
For investors who have been through closings, what title issue has surprised you the most during a deal?
What you also need to inspect is what is excluded in schedule B in a policy which materially affects your ability to file a claim and get accepted.
Thank you @Thomas Meyer! Great point. The Schedule B exceptions can be easy to overlook, but they matter because they spell out what the policy is not covering. I also agree that the right endorsements can add important protection depending on the property and the deal.
That is another reason I like reviewing the title commitment early, not just waiting until the closing table. Thanks for adding this.
The title issues that surprise people most are usually the ones where everybody assumes ownership is obvious because possession is obvious.
Someone has lived there for 20 years.
Someone has been paying the taxes.
Someone has been collecting the rent.
Someone signed the listing agreement.
None of that necessarily answers the legal question:
Who has authority to convey the property today?
Estate situations are probably the cleanest example.
You can have a perfectly cooperative family, a buyer ready to close, a lender ready to fund, and then discover that the person everyone thought could sign either was never appointed properly, does not have the authority everyone assumed, or is only one piece of a larger ownership chain.
That turns a real-estate problem into a probate problem.
And probate does not care about your closing date.
Old unreleased mortgages are another good one because they expose the difference between economic reality and record reality.
Everybody may agree the loan was paid off years ago.
The seller may even have documentation showing that.
But if the release was never properly recorded, the title file still has to be cleaned up.
Same with old judgments, municipal liens, prior spouses, bad legal descriptions, deed errors and improperly handled transfers.
The thing I think investors sometimes miss is that title risk is really timeline risk before it becomes legal risk.
A lot of these problems are solvable.
The problem is that “solvable” and “solvable by Friday” are completely different things.
If your financing commitment expires, your rate lock expires, your 1031 clock is running, your contractor is scheduled, or you have another closing dependent on this one, the title defect can create economic damage even if everybody ultimately fixes it.
That’s why I like your point about starting the work early.
I’d take it one step further on unusual deals.
If I'm looking at probate, tax sale, inherited property, divorce, an entity with multiple members, a seller signing under POA, or anything where the ownership chain looks remotely interesting, I want to understand authority before spending heavily on the rest of the transaction.
There’s no great prize for getting the inspection, appraisal and loan approval done first and then discovering the seller cannot presently deliver the thing you’re buying.
I also think investors should distinguish between:
“There is a title problem.”
and
“There is a title problem I don’t understand.”
The second one is where people make bad decisions.
An old lien with a clear payoff path may just be paperwork and time.
A missing heir nobody can locate is a very different risk.
A deed defect with a cooperative prior owner is different from one involving someone deceased or hostile.
The headline issue matters less than the path to cure.
So one question I’d add when title finds something is:
What exactly has to happen for this defect to be cleared, who has to cooperate, and how much of that process is within our control?
That usually tells you whether you have an inconvenience or a deal killer.
And for investors buying distressed property, I’d probably move title diligence even farther forward than a normal retail buyer would.
The cheaper and messier the deal looks, the more I assume some of the discount may be compensation for a problem I haven’t found yet.
Sometimes that problem is the roof.
Sometimes it is the foundation.
Sometimes it is a dead person who still owns 25% of the property.
The last one is harder to fix with a contractor.
@Michael Eskenasy, this is such a good way to put it, especially the part about title risk becoming timeline risk.
I also really like your point about asking what has to happen to clear the issue, who needs to cooperate, and how much of that is actually within your control. That is often what tells you whether the problem is manageable or whether it can seriously affect the deal.
And you are right, the complicated ones are usually not the problems people expect going in.
Thanks for adding such a thoughtful perspective here.
Do investors normally don't do their own search of deeds, FEMA floodplain, and zoning? I find it really easy with databases online. The official title search is backup and for title commitment.
So far both of my deals have taken advantage of paperwork snafus that made standard homeowner pass by.
@Jennie Ballard , I think doing your own preliminary research can be very useful, especially if you know where to look. Checking deeds, zoning, flood maps, and other public records can help you spot issues early and sometimes even uncover opportunities other buyers miss.
From the Maryland side, though, I would still treat that as the first layer rather than a replacement for the formal title work. Some issues are not obvious from a quick public-record search, especially older liens, unreleased mortgages, estate problems, or questions in the chain of title.
It sounds like you have already found value in catching those paperwork issues early, which is a great example of why doing your homework before closing matters.