What is a "title defect"?

A title defect is anything that can cause a title to be considered invalid or defective in some way. In other words, a title defect occurs when there’s a dispute about who owns the house.

Some examples are:

• Invalid documents due to forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation.

• Failure of any person or entity to have authorized a transfer or conveyance.

• A document affecting title that is not properly executed, signed, witnessed, notarized, or delivered.

• Undisclosed or unrecorded easements not otherwise apparent on your land.

• No right of access to and from the land.

• A document executed under a falsified, expired, or otherwise invalid power of attorney.

• A document not properly filed, recorded, or indexed in the public records.

• Ownership claims by undisclosed or missing heirs.

• Defect arising from an improper prior foreclosure.

• Undisclosed restrictive covenants affecting your property.

• Any statutory or constitutional contractor’s, mechanic’s, or materialman’s lien for labor or materials that began on or before the policy date. Lien for labor or materials furnished by a contractor without your consent.

• A previous owner failed to pay a mortgage or deed of trust; a judgment, tax, or special assessment; or a charge by a homeowners or condominium association.

• Other liens or claims that may exist against your title that are not listed in the policy.

According to the American Land Title Association, one in three title searches reveals a defect or third-party claim. If your client discovers these or other title defects on a new property, the policy will protect their financial interests up to the purchase price. This is why having title insurance is well worth the policy’s price.