Own Luxury Homes®
Title Contingency: What Title Searches Find and Fix
Title search finds: mortgage liens (cured at closing), property tax arrears, mechanic’s liens, HOA delinquency, IRS liens (2–6 weeks), judgment liens, unknown easements, boundary disputes, forged deeds, probate/unknown heirs. Most are curable but need time. Prelim title report week 1 = time to fix. Week 3 = closing delay. Owner’s title insurance ($500–1,500) protects buyer; lender’s policy protects only lender. Own Luxury Homes® 12-Point Agent Integrity Audit™ — prelim title report ordered week one, every transaction.
Title Contingency: What a Title Search Surfaces, What Kills Closings, and How to Protect Yourself
The title contingency is the least-discussed contingency and the one that protects against problems that neither buyer nor seller created. A title defect can surface from decades-old transactions: an heir who was never paid, a lien from a contractor who worked for a prior owner, a boundary dispute that has never been resolved on paper. Understanding what the title search looks for, which findings kill closings vs which are curable, and why owner’s title insurance is not optional is the complete protection framework for every transaction.
What a Title Search Actually Does
A title search examines the public records for a property — going back decades or more — to construct the chain of title and identify any claims, liens, or defects that could affect the buyer’s right to clear ownership. The title company typically completes this within the first 5–10 days of escrow and issues a Preliminary Title Report (also called a title commitment in some states).
What the Title Search Finds: The Categories
| Finding | Curable? | What Must Happen | Timeline | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Mortgage/deed of trust lien | Yes — standard | Paid off at closing from seller proceeds | Same day as closing | ||||||
| Unpaid property taxes | Yes | Paid at closing; prorated between buyer and seller | Same day | ||||||
| Mechanic’s/contractor lien | Usually yes | Seller must pay or bond the lien; disputed liens require resolution | 1–4 weeks typically | ||||||
| HOA delinquency lien | Yes | Seller pays HOA balance at closing; HOA provides estoppel letter | 1–2 weeks | ||||||
| IRS/state tax lien | Usually yes | IRS subordinates or seller pays from proceeds; negotiation required | 2–6 weeks | ||||||
| Judgment lien (lawsuit) | Usually yes | Paid from seller proceeds or bonded | 1–3 weeks | ||||||
| Easement (undisclosed) | Usually not curable | Buyer accepts or cancels; affects use of property | Buyer must decide | ||||||
| Boundary/survey dispute | Sometimes | Survey ordered; attorneys negotiate; may require court action | 4–12 weeks+ | ||||||
| Forged deed in chain of title | Difficult | Title insurance claim; quiet title action; potentially years | Months to years | ||||||
| Probate issue / unknown heir | Usually yes with time | Probate reopened; heir located and paid; court order | 2–6 months+ | ||||||
| CC&R restriction violation | Depends | May require variance or HOA approval; or property reverts to HOA | Varies | ||||||
| Most title defects are curable but require time. The question is whether the fix happens within the transaction timeline or requires the buyer to extend closing (or cancel). | |||||||||
What the Preliminary Title Report Does NOT Catch
The title search is thorough but not omniscient. It examines recorded documents. It cannot find:
| Defect Type | Why It’s Missed | Protection | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Forged documents filed after the search date | Recording happens after closing; search pre-dates it | Owner’s title insurance covers post-closing forgery | |||||||
| Undisclosed heirs of a prior owner | Never appeared in recorded documents | Owner’s title insurance covers unknown heir claims | |||||||
| Survey/boundary issues in non-survey states | Boundaries not always recorded precisely; survey not always done | Owner’s title insurance + independent survey | |||||||
| Deed errors from decades ago | May have been recorded incorrectly; not obvious in chain | Owner’s title insurance covers errors in recorded docs | |||||||
| This is why owner’s title insurance is not optional. It protects you against defects the title search cannot detect. | |||||||||
Owner’s Title Insurance vs Lender’s Title Insurance
| Policy | Who It Protects | Coverage Amount | Duration | Required? | |||||
|---|---|---|---|---|---|---|---|---|---|
| Lender’s title insurance | The lender’s interest in the property | Loan amount (declines as mortgage is paid) | Until loan is paid off | Required for any financed purchase | |||||
| Owner’s title insurance | The buyer’s full ownership interest | Purchase price (may increase with inflation rider) | As long as you or your heirs own the property | Optional but strongly recommended | |||||
| The lender’s policy protects only the lender. If a title defect surfaces after closing, the lender is protected; the buyer may not be without their own policy. Owner’s title insurance is a one-time premium paid at closing — typically $500–1,500 depending on purchase price and state. | |||||||||
The Title Review Contingency: Using It Correctly
The title review period — typically 5–10 days after receipt of the preliminary title report — gives the buyer the right to review the report and object to any finding. If the seller cannot or will not cure an objected-to title defect, the buyer can cancel and receive their deposit back.
What to Look For in the Preliminary Title Report
(1) All liens: must be shown as to-be-discharged at closing. (2) Easements: verify they are disclosed and do not affect your intended use. (3) CC&R restrictions: read the restrictions that affect how you can use the property. (4) Any exception item that the title company will NOT insure: these are the red flags that require resolution before closing.
“The title issue I see most often in estate and probate sales is the unknown lien from a contractor who worked for the prior owner and never recorded a release when they were paid. The lien is still on record. The seller doesn’t know it exists. The title search finds it. If we order the preliminary title report in the first week of escrow, we usually have time to get it cleared. If we wait until week three, we’re scrambling and the closing gets delayed. Order the preliminary title report in the first week, every transaction, every time.”
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®
What is a title contingency?
The right to review the preliminary title report and cancel if the title has defects the seller cannot cure. The review period is typically 5–10 days after the buyer receives the preliminary report. Most title defects are curable; the contingency protects the buyer if the seller cannot or will not fix them.
What is a preliminary title report?
A report issued by the title company showing the current state of ownership, all liens and encumbrances on the property, and any exceptions to title coverage. Ordered in the first week of escrow. Shows what the title company will and will not insure. The buyer’s agent should review this immediately upon receipt.
What is owner’s title insurance and do I need it?
A one-time insurance policy purchased at closing that protects the buyer’s ownership interest against defects not discovered in the title search (unknown heirs, forgery, boundary errors). The lender’s title insurance (required for financed purchases) protects only the lender. Owner’s title insurance protects you. Cost: $500–1,500 at closing. Strongly recommended.
What happens if a lien is found on the title?
Most liens (mortgage, property tax, HOA, contractor, judgment) are curable: paid off at closing from the seller’s proceeds. The title company coordinates the payoff. Complex liens (disputed, IRS, probate-related) require negotiation and may delay closing. The seller must cure all title objections or the buyer can cancel within the title review period.
Own Luxury Homes® — agents who order the preliminary title report in week one and resolve issues before they kill closings. 12-Point Agent Integrity Audit™. Talk to a contract specialist ›
"The introduction Own Luxury Homes® makes is to a specialist with documented closing history in your specific market — not the county, not the metro, the submarket you're actually selling or buying in. That's the standard we verify before your name goes anywhere."
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes® (FL License BK3626873)