All Things Title
Liens on Property: Common Title Issues That Can Delay Your Closing
When a property goes under contract, most people focus on inspections, financing, and the closing date. What many don’t realize is that liens on the property are one of the most common reasons a closing gets delayed.
A lien is a legal claim against a property to secure payment of a debt. If a lien appears in the public records, it must typically be resolved before the property can be sold and clear title can be conveyed to the buyer.
Identifying Liens During a Title Examination
During a title examination, a closing attorney will search the public records to identify any liens that could affect the property. In Georgia, some of the most common types include:
1. Tax Liens (Unpaid Property Taxes): If a property owner doesn’t pay their property taxes, the state can file a lien that attaches to the property. In Georgia, tax liens take priority over most other liens. If they are not paid, the county can eventually enforce the lien through a tax sale. At closing, any outstanding property taxes must be paid in full to clear title.
2. Judgment Liens: When a creditor obtains a judgment against a property owner, that judgment can be recorded and become a lien against the owner’s real property. Judgment liens can be especially problematic because they attach to all properties owned by the debtor, they can remain in effect for years if not properly satisfied or released, and they often require coordination with the creditor to obtain a payoff and release. Before closing, judgment liens must typically be paid off or otherwise resolved to ensure the buyer receives clear title.
3. Materialmen’s Liens (Contractor Liens): Materialmen’s liens arise when contractors, subcontractors, or suppliers are not paid for work or materials provided to improve a property. These liens are common in situations involving recent renovations or construction, disputes between homeowners and contractors, and work performed shortly before the property is listed for sale. In Georgia, materialmen’s liens are strictly governed by statute and must be properly filed and enforced. Even if a lien is disputed, it can still delay closing until it is resolved, secured by a financial guarantee (surety bond), or otherwise addressed.
Liens are a routine part of real estate transactions, but they require careful handling. A thorough title examination by an experienced Georgia closing attorney will identify these issues early and help ensure they are resolved before they delay your closing.
Since 2003, Origin Title has handled real estate transactions – purchases, refinances, reverse mortgages – quickly and professionally. There will be no surprises, nothing misunderstood. Title searches are thorough and well-reasoned, to avoid unpleasant surprises later down the road. Calculate your closing costs in Georgia or Florida using our calculator or contact Origin Title using this form.
Easements
Easements come in many types, shapes, and sizes. An Easement is the right of another person or entity to use the land of another for a specific purpose. The electric company often has an easement to run power lines to a house and trim trees along a right-of-way. Easements can also ‘run with the land’ and be a valuable part of certain real estate.
With many easements, there is a servient lot and a dominant/beneficiary lot. The owner of the beneficiary lot has a legal right to use a certain portion of the servient lot for a specific purpose. The purpose can be egress/ingress, running a sewer line, and hunting/fishing, et al.
One of the most common mistakes with easements is conveying an easement when one person or entity owns both the servient and dominant lot. With two lots, if the same person or entity owns both lots, or becomes the owner, the easement, (which is the lesser estate), merges into the fee simple ownership interest (O.C.G.A. §44-6-2). Along the same line, the owner of two parcels of land cannot grant an easement to one of the tracts because the owner already has the legal right to access both properties (Gilbert vs Fine 288 GA App 20).
Think of two lots of land as if they were each a pie. One owner gave a neighbor a slice of their pie to represent an easement. The owner then purchased the neighbor’s lot. The owner who owns both lots now has all the pieces of the pie again. If that owner sold the servient lot without keeping the piece of pie that was the easement, then the easement disappears. The seller gave the buyer the whole pie and eliminated the easement because the seller did not reserve, or keep, a slice of the pie.
When preparing for a closing, closing attorneys will have a title commitment. The title commitment will list all the items required to insure title as well as any items that are exceptions to the title policy. Lenders and commercial purchasers always get a title commitment to review. It is not very common for a residential purchaser to receive it, even though any buyer could ask to review it.
The closing attorneys should notify a buyer if there is an uncommon easement running through the property being purchased, like a sewer or an access easement. It never hurts to ask the closing attorney for the title commitment and review the exceptions.
John C. Bennett is a real estate closing attorney and owner of Origin Title and Escrow, Inc.. Since 2003, Origin Title has handled real estate transactions – purchases, refinances, reverse mortgages – quickly and professionally. There will be no surprises, nothing misunderstood. Title searches are thorough and well-reasoned, to avoid unpleasant surprises later down the road. Calculate your closing costs in Georgia or Florida using our calculator or contact Origin Title using this form.
Title Reversion for Georgia Mortgages
Old security deeds (commonly referred to as mortgages) do not always get released or
canceled as they should. The lender may have failed to file the release, gone out of business, or
may have been purchased by another bank. These old loans can be very difficult to track down.
A security deed is a document conveying a security interest in the real estate to the lender as collateral for a debt. Prior to 1994, any interest conveyed to the lender in a security deed would revert back to the
borrowers 20 years after the maturity date on the Security Deed. If no maturity date was stated,
then the security interest would revert 20 years after the security deed was recorded.
After 1994, Georgia code 44-14-80 states that any interest conveyed in a security deed reverts
back to the borrower seven years after the maturity date, or seven years from the date of recording if no
maturity date is stated in the security deed.
This changes if the lender states in the security deed that it is intended to establish a perpetual
or indefinite security interest in the property. If this language is included in the security deed, the
title would still revert to the borrower seven years after the maturity date, OR 20 years from the date
of conveyance, whichever is later.
Most traditional residential security deeds mature in 30 years. For most loans, if more than seven
years have passed since the maturity date and the loan was recorded more than 20 years ago,
then title has reverted to the borrower and there is no need to get a release.
It is not uncommon for heirs to have to try and track down an old mortgage their parents paid in
full, but have no record of the full payment or release. This can take months to get corrected
without a loan number or something similar to go on.
Always keep your letter of release or document from the lender showing a loan is
paid in full. This will be a tremendous help to your closing attorney if a release was not properly
filed.
John C. Bennett is a real estate closing attorney and owner of Origin Title and Escrow, Inc..
Since 2003, Origin Title has handled real estate transactions – purchases, refinances, reverse
mortgages – quickly and professionally. There will be no surprises, nothing misunderstood. Title
searches are thorough and well-reasoned, to avoid unpleasant surprises later down the road.
Calculate your closing costs in Georgia or Florida using our calculator or contact Origin Title using the form provided.
Adding a Minor Child to a Real Estate Title
What are the issues with adding a minor child to a real estate title? It seems like an easy way to let children inherit real estate.
First, once on the title, it is very difficult to refinance or to convey the title out of the child’s name. Any deed signed by a minor is voidable, and parents may not sign on behalf of their children.
To convey the title out of a child’s name, the court must appoint a conservator to represent the child’s best interests. It is often not in the child’s best interest to sell the house, refinance, or convey the title back to a parent.
The only other option is to wait until the child is legally competent (18 years old in most states) and have the child sign a deed then.
This is another reason to have a clear and concise will describing how you want your heirs to inherit your assets. Adding children to the title can waste a lot of time and money that would be better spent making a proper estate plan instead.
John C. Bennett is a real estate closing attorney and owner of Origin Title and Escrow, Inc.. Since 2003, Origin Title has handled real estate transactions – purchases, refinances, reverse mortgages – quickly and professionally. There will be no surprises, nothing misunderstood. Title searches are thorough and well-reasoned, to avoid unpleasant surprises later down the road. Calculate your closing costs in Georgia or Florida using our calculator or contact Origin Title using this form.
Adding Heirs To A Title is Not Always a Good Idea
In Georgia, property owners can either own real estate with another person as tenants in common, or as joint tenants with survivorship. Georgia does not have Tenancy by the entirety, although other states do.
With Tenants in common, if an owner passes away, that person’s heirs inherit their portion of the property.
If they owned the property as Joint Tenants with the right of survivorship, the property passes to the surviving owner. This is great for married couples who want to leave the property to their spouse without going through probate. It is not always the best tenancy if a person is on their second or third marriage.
There are several issues with adding someone to a title as a substitute for probating an estate, though.
a. Any liens or judgments against that person will attach to the property. This includes past and any liens filed in the future.
b. Inheriting property instead of being added to the title actually has some tax benefits. Being added to a title as a joint tenant eliminates the tax benefits of inheriting real estate, and gifts are often taxable.
c. Adding a child to a title is not always a good idea. Conveying property to a child under the age of 18 years old creates a whole list of problems, such as the inability to sign for loans and sale of the property.
So be careful who you add to the title, and why. It is not always the best way to avoid probate. Probating an estate can have tax advantages, and is much easier with a will.
John C. Bennett is a real estate closing attorney and owner of Origin Title and Escrow, Inc.. Since 2003, Origin Title has handled real estate transactions – purchases, refinances, reverse mortgages – quickly and professionally. There will be no surprises, nothing misunderstood. Title searches are thorough and well-reasoned, to avoid unpleasant surprises later down the road. Calculate your closing costs in Georgia or Florida using our calculator or contact Origin Title using this form.