Can Home Renovations Affect My Real Estate Title?

Avoiding Surprises With Home Construction

Renovating a home can indeed have an impact on the title. Or maybe two impacts. These concern liens and permits.

  • Whether you are buying a renovated home or plan to remodel the house yourself, be mindful of liens. Contractors place liens on homes for unpaid bills. Liens are clouds on a home’s title, and they usually have to be cleared before the owner can sell. And if you ever want to refinance, you’ll have to resolve the lien(s) to clear up the title.
  • There is also the matter of whether the work was carried out under the correct permit process, in compliance with the building code. If not, title insurance coverage can get complicated. So can the process of rectifying any mistakes the previous owner might have made.

These two issues can have further impacts. For example, does title insurance protect a new owner for problems related to poor renovations? How will unpermitted work in the house impact the homeowner who goes to sell?

Here, we take a look at these various connections between renovations and the house title.

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The Whole Enchilada? Know What’s in Your “Bundle of Rights” When You Buy a Home

Image of enchiladas on a plate.

The privileges you get as a homeowner are, in a famous legal metaphor, your bundle of rights. Why the metaphor makers didn’t choose an enchilada is anyone’s guess. It certainly would have spiced up law school courses.

In any case, what’s in a real estate deed matters. If your bundle is missing a few sticks, so to speak, you might not get to use your property as planned. You could need to negotiate or compromise with another party. You might learn that someone else has a conflicting interest and possibly always will.

Ideally, the buyer of a home with a clear title receives complete ownership and the prerogative to use it as desired. In reality, things get complicated. Here are six of the most significant rights you can have:

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Not Entitled? Owners of “Heirship Properties” Locked Out of Disaster Relief

An older and younger person laying on the floor in a living room coloring or doing school work together.

July 2021 — Elsa was the earliest “E” storm we’ve ever experienced, and Colorado State University now has raised its 2021 Atlantic hurricane season prediction. We should now expect 20 named storms, says CSU. This, after the unprecedented 2020 hurricane season.

Disaster relief funds will be vital this year. And this brings up multiple problems for people in the hurricanes’ paths with no clear title to their homes.

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Issue Spotting: Buying a Home With an Unmarried Partner

Thinking of buying a house with your partner? Many unmarried couples decide to live together, often co-owning their homes. Here are some questions to consider if you’re thinking of making a similar commitment.

Will One Partner Take Out the Mortgage? Or Will You Be Co-Borrowers?

Two people sitting in a house with moving boxes behind them,

When unmarried couples apply for a mortgage, the partner with stronger credit may opt to be the sole buyer. This can lead to the best possible loan terms and rates.

Alternatively, the couple can apply for a mortgage in both names and pay it off from a joint bank account. Buying a home together, as co-borrowers, may seem to strengthen the couple’s borrowing power. Yet it can do the opposite. A lender will look at the lower of the two credit scores to make approval decisions.

Moreover, co-borrowers need to refinance the loan if they later stop co-owning and put the title into only one of their names. Handling a home loan jointly can complicate the couple’s future if the relationship changes.

Before applying for your mortgage, get the facts on credit scores — and how to boost yours.

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Solving Title Problems for a Home with a Previous Foreclosure

Image of a person standing inside a house looking at paperwork. Captioned: Solving Title Problems for a Home with a Previous Foreclosure

A foreclosure usually means a previous owner fell into default on the mortgage. When there’s an unpaid mortgage debt, the lender can put a lien on the property, and ultimately claim the property itself. Foreclosures can also happen due to a neglected tax lien, or some other kind of lien.

But there’s just one question we’re going to explore here. If you decide to purchase a foreclosed home, what problems could arise later? Let’s dive right in and look one of the stickiest situations: a legal challenge from the former owner.

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7 Common Title Problems in Real Estate Deals

Image of a hand holding a pen signing a legal document.

When you tour a home, a big question is whether “what you see is what you get.” Appraisers, home inspection professionals, and title companies help offer the answers. Through the title search, ownership of the land in traced back in time, showing current legal ownership, easements, and any notable issues.  

Until the moment the seller signs the buyer’s purchase offer, the buyer can back out of the deal, and a frequent reason for doing so involves marketability of title. A cloud on the title or an undisclosed easement might come to light, putting off a reasonable buyer. In any case, the mortgage lender must be convinced that the market price of the asset is truly fair and accurate—that what you see is what you get.

So, in the all-important title search, a title company scours deeds and other documents recorded with the county, state and federal tax lien records, and various financial, bankruptcy, and divorce records that could complicate a title. If nothing substantial is unearthed, the title is deemed clean. Some common, even beneficial encumbrances will turn up in a title search. A buyer can expect to learn about homeowners’ association rules, utility easements, and normal zoning restrictions. But detrimental encumbrances can be dealbreakers.

Here are seven of the most common title issues to watch for in any real estate sale:

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Property Title? Deed? What’s the Difference?

Image of a legal document in background. Captioned: Property Title? Deed? What's the Difference?

When you buy a home, you receive the deed. And you hold title. The deed and title are interrelated yet distinct concepts.

Title refers to ownership, including the legal right to possess and use a parcel, the right to exclude others from using it, and the right to transfer your interest to others.

If you do transfer your property to another person, the deed is the vehicle that moves your legal interest in the property to the other party.

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