You may accept an offer on your California home only to discover a lien, deed error or other title issue during escrow, when a neutral third party holds funds and documents until the conditions of the sale are met. These problems do not always stop a sale, but they can create extra steps and delays before closing. Understanding what may appear during the title review can help you identify potential complications before they interfere with the transaction.
Some title and ownership issues that can affect a California home sale include:
1. Mechanics liens
An unpaid contractor, subcontractor or supplier may record a mechanics lien against your property. A recorded lien can make it difficult to sell until you pay the claim, obtain a release or otherwise resolve it. Resolving the issue may require payment records, a formal lien release or other documentation showing that the claim no longer affects the property.
2. State and federal tax liens
If you owe state or federal taxes, the Franchise Tax Board or IRS may have a recorded lien affecting your property. During a sale, you may need to pay the lien from the proceeds or otherwise address it before closing. Your escrow or title company can request information about the amount owed.
3. Encroachments
A fence, driveway or structure that crosses a property line can raise questions about ownership or use. Unlike a recorded lien, an encroachment may not appear in a standard title search. A survey or inspection may bring the issue to light.
4. Problems with an earlier deed
A missing required signature, incorrect name or improperly completed deed from an earlier transfer may create uncertainty about ownership. Resolving the ownership question may require additional documentation or a corrected deed before the title company is willing to insure the transaction.
5. Incorrect legal descriptions
A deed’s legal description identifies the land you are transferring. If the description contains an error or conflicts with earlier records, you may need to correct the discrepancy before closing.
When a title problem needs closer review
Not every complex title issue involves routine paperwork. A disputed lien, conflicting deeds or uncertainty about who holds an ownership interest may require a more detailed review than the escrow process alone can provide. Legal guidance can help you determine whether a claim is valid, understand what your deed or other records mean and identify what may be required to resolve a dispute before the sale can move forward.
