Undesirable Home Features: What’s Not on the Deed Can Hurt You

Looking for an affordable home? There are affordable U.S. cities. Keep your eyes open, though. Some of the homes may need a thorough look before closing.

Affordability attracts hopeful deed seekers. But these potential buyers must be alert to systems that need costly repairs and upgrades. Harvard University’s Joint Center for Housing Studies says an average U.S. household now spends $7,100 per year on home repairs. But costs can go far higher when plumbing, wiring, or foundation problems surface. Meanwhile, insurance isn’t getting any cheaper. Nor are the materials or labor costs.

Titles, too, can have hidden defects.

Could There Be a Lien That Slips Through a Title Search?

An unknown lien on the title might turn out to be a big debt that a buyer gets stuck with.

Sure, there’s a title search done for most home sales. Still, now and then, a lien slips past the title company’s attention.

Agents can help buyers out by getting municipal lien searches done. Find out what permitted work has been carried out. And what obligations a local government agency could have placed on the property.

Municipal liens can relate to old utility or property tax bills, unpaid fees or assessments imposed by homeowners’ associations (HOAs), bills related to local infrastructure, and code violations.

There could be other kinds of liens and some could even be unrecorded. There can be quirky things like released and reinstated, or misaddressed, tax claims or assessment liens. Unrecorded mortgage releases after borrowers’ payoffs are actually not rare.

Some states allow for mutual indemnity agreements that let title companies issue clear titles so loans can be approved and deeds can be transferred. If this occurs in your transaction, work with the title company after closing to remove the underlying cloud on the title.

At closing, a buyer can get owner’s title insurance by paying a one-time premium. It’s a good idea to have it—for peace of mind alone. “Extended coverage” can protect a deed holder from the consequences of unrecorded tax or construction liens. It could spare a buyer from having to pay for past zoning violations. And so on. The title company can explain what’s available and most typically needed in the home’s location.

Note: Mortgage borrowers pay for a lender’s policy. Only the lender, as the named beneficiary on the policy, is covered. That’s why buying an owner’s title policy matters.

What to Know About the Impact of Age and Wear

The National Association of REALTORS® (NAR) points out some areas of the country where the weather has been hard on homes with longer deed histories.

In many states, disclosure rules are not stringent. It’s closer to a buyer-beware environment.

When the impact of age, wear and tear surface, NAR warns, that dream home may turn out to be a lemon. The National Association of REALTORS® website, Realtor.com, offers a map of the states with the highest risk of these “lemon” properties.

So, you’ll want to look carefully for this effect in Rhode Island, Ohio, Massachusetts, Iowa, and Connecticut. As for cities, heightened due diligence may be wise in Erie, Pennsylvania; South Bend, Indiana; and Binghamton or Buffalo, New York. In these areas, NAR explains, “historical and midcentury homes are common—as is the punishing weather” that takes a toll over time. Freezing and warming can put pressure on foundations, roofs, windows, and plumbing. Climate impacts can also result in insurers “blacklisting” condos and houses.

Where soils are clay-heavy, moisture can change foundations. Cracking and slanting can be signs of value depletion. Beat-up roofs, old electric or heating and air conditioning systems—these can slim down the owner’s return on investment.

Sometimes, the interior of a home speaks loudly about its age. Even minor details can bring the value down. A separate formal dining room is passé, says the National Association of REALTORS®, which adds:

A slightly outdated space is forgivable, yet when your home feels like a time capsule, you’ve created a serious obstacle to a sale.

Some buyers like the character of an older home, or they like the challenge! But most buyers don’t want a home that’ll be a financial drain. Outdated interiors can hint at the possibility of delayed upkeep. When appliances are older, there could be old electric panels and gunked up piping, too. Interestingly, NAR says a spiffy kitchen can be a major boost to a home’s value: “A kitchen that feels ready often sells the house.”  

What’s the Buzz About Transmission Lines and Pipelines?

Properties near power lines tend to sell at a discount. They can signify utility easements that limit the use of the property, and power transmission can emit humming or buzzing. Easement restrictions may involve pipelines carrying gas or potentially hazardous liquids.

Notice these indicators, and find out more if you see them:

• Pipeline markers.

• Wide, straight, cleared areas without trees. Mowed pathways can signify safety access for energy companies.

• Also look at the National Pipeline Mapping System to inform your due diligence as a buyer. 

Before completing a deed transaction, know what’s in the pipes, where they go, what easements and maintenance are involved, whether there are leak risks, and how any of this could impact the value of your deed. And understand that this is an ongoing issue in many neighborhoods, and you might not have control over it in the future. For example, it’s quite possible that currently distant carbon capture pipelines can be extended, and may be imposed on deed holders by way of eminent domain.

Usually, recorded surveys show high-capacity pipeline crossings and easements. Related restrictions should appear in the property’s title records.

Buyer, Take Care

We hope this gives readers a starting point in the due diligence stage of acquiring a deed. A good home inspector, and even an experienced agent, can spot concerns.

There’s a lot to be said for respecting a home and the value of its deed. We love those sellers who have saved their receipts, showing the upkeep carried out over time. Those who followed up with to-do- items found by a licensed home inspector when they purchased the home. Those who know the condition of the foundation. Having the ducts and sewers scoped can save the next owner trouble…

And when you’re buying, and you see something that gives you pause, check into it. Ask questions. You usually have more to gain than to lose by taking a deep breath…and exercising extra caution before pouncing on a great deal.