Title Defect Resolution in Practice

Mortgage liens are resolved through payoff at closing—the escrow agent obtains a payoff letter from the existing lender and disburses the payoff amount from closing proceeds. Mechanic's liens require either payment or a lien release from the contractor. If the lien is disputed, the seller may post a bond to move the lien from the property to the bond, allowing closing to proceed. Tax liens (federal, state, and property tax) must be paid at or before closing—no title company will insure over unpaid tax liens. Judgment liens attach to all real property owned by the debtor in the county where the judgment is recorded. Resolution requires payment, satisfaction of judgment, or demonstration that the judgment debtor is not the same person as the property owner (a common issue with common names).

Missing or improperly executed deeds can often be corrected with a corrective deed—a new deed that references and corrects the error in the original. If a prior owner is deceased and the property was never properly probated, the heirs must be located and a probate proceeding or affidavit of heirship may be required. Spousal interest issues arise when a married grantor conveyed property without the spouse's signature (required in many states). Resolution requires a quitclaim deed from the spouse or a quiet title action. Entity authority issues require corporate resolutions, partnership authorizations, or LLC operating agreement provisions demonstrating the signatory's authority to convey.

Easements recorded against the property are generally permanent and cannot be removed—they become title exceptions. The buyer's decision is whether the easement is acceptable (utility easement along the property boundary) or deal-threatening (access easement crossing a planned building site). Encroachments discovered by survey—where a structure crosses a property boundary—require either a boundary line agreement with the neighbor, removal of the encroaching structure, or acceptance as a title exception. Restrictive covenants may limit property use, density, or building height. If the covenants conflict with the buyer's intended use, legal counsel should evaluate whether the covenants are enforceable and whether variance or modification is possible.