Status of Title

• Lenders require title insurance, so before you can obtain financing, a title has to be declared "clean" by a title company before it will insure either the lender or the home buyer against defects in title. If problems are discovered during the title company's search of the public records, such as a break in the chain of title, they will have to be resolved before the title can be insured. When the title company has finished searching the records, it will issue a commitment that list the requirements, such as payment of existing mortgages and liens, payment of taxes, or correction of documents found in the chain of title. The commitment also includes a list of items (exceptions) that the company will exclude from its policy.
  
  

Possible Problems

• A break in the chain of title can be the result of incorrectly prepared deeds, which makes them void, or people who never deeded out, or even heirs who never released their interests in property they received through an inheritance. Most of the time, errors are of a clerical nature, such as leaving off information or adding incorrect information. Depending on the situation, it's possible to easily repair the damage with an affidavit or rerecorded document correcting the error(s).
  
  

Title Insurance

• Title insurance protects an owner from problems such as inadequate legal descriptions, problems in signature acknowledgements, tax record errors, deeds executed by incompetent individuals, forged documents, or errors in recording. If any title problem arises during the policy holder's ownership of the property, the title insurance company will resolve the issue, at its own expense, allowing the owner to enjoy their possession of the property, free from title worries.
  
  

Quiet Title Action

• When affidavits and/or corrective document measures are not enough to resolve a bad title issue, a quiet title action, also known as a "suit in equity," will determine the rightful owner of the property in question. Common situations that require this kind of action are conflicts between family members, between parties who all claim ownership of the same property due to errors in conveyances, or after a purchase has been made through a tax sale.