When you find a house that fits in your price range and meets all of your major criteria, you may feel eager to make an offer on the property. Sadly, for a tiny number of homeowners every year, their dream house turns into a nightmare when a title claim disrupts their ownership and quiet enjoyment of the property.
Despite the efforts that New York takes to make the ownership records for a property straightforward and publicly available, issues can arise where someone other than the owner on record has a claim to the title of a property. When that happens, the new owner could wind up going to court to defend their interest in the property.
There are certain situations that are more likely than others to result in claims against the title of a property. While these aren’t reasons to forgo buying the property, they are extra incentive to invest in a buyer’s title insurance policy at closing.
A recent sale related to the estate of someone who died
Perhaps you were able to get a great deal on this house because of how outdated it is and the fact that the owner was the executor of an estate who didn’t want to spend time fixing up the property. Maybe you bought a fully renovated house ready to live in that got snapped up by property flippers who purchased it from someone’s estate.
When one of the more recent sales transactions for a property relates to estate administration, the risk is always there for someone to bring a claim against the property. Estate executors and administrators usually do everything in their power to reach out to beneficiaries and heirs before making major decisions, such as the sale of real estate.
However, if they failed to contact someone who had the right of first refusal or significant inheritance rights to the property, that individual could, in theory, bring a claim against the title that the courts will uphold.
Messy divorces and breakups can also lead to title claims
Some people engage in questionable tactics to influence the outcome of a divorce. They might transfer a house that they’ve paid for with the help of their spouse but that they hold solely in their name into a trust right before the divorce.
It’s also possible for someone to engage in similar questionable transfers prior to the break-up of a romantic relationship that, while not a marriage, involved the joint ownership and maintenance of real estate. It is common for couples to sell their marital home as part of a divorce or break up, but sometimes, one spouse does something that can then give the other a claim against the property in the future.
Other common issues that can lead to title claims include errors in the public record, missing easements, missing liens and even fraud.