Purchasing real estate in Florida can become problematic if title issues prevent the transfer of ownership. The title is evidence of ownership rights over the property. Paying the price agreed upon with the seller should automatically trigger the transfer of ownership to the buyer. However, some encumbrances or defects can prohibit the buyer from acquiring the title.
The most common title defects a buyer discovers after signing the contract (during the due diligence period) are public record errors, intentional wrongful acts, third-party rights, unpaid debts, and deed problems.
During the due diligence process, a title agent or title insurance company searches the property records on behalf of the buyer to ensure the title is free of any defects and that the seller owns the property. One of the most typical encumbrances they can discover is public record errors resulting from negligence in keeping true and accurate property records. The most common mistakes include improper execution of deeds and inaccurate legal descriptions of the property. Resolving public record errors requires filing remedial legal actions with the relevant authorities.
Intentional wrongful acts are impediments to the ownership title transfer. Forgery and fraud are the most common examples of unlawful acts that prevent the purchaser from acquiring the title to the property they purchased. Under Florida law, forged deeds are void and cannot produce legal effects, even if the buyer was a bona fide purchaser.
Third-party rights on real estate prohibit the transfer of ownership. During due diligence, buyers often discover that third parties have a claim to the property. Third-party claims can result from unpaid debts, unsatisfied mortgages, or government claims. If the seller has unpaid bills to the contractor, that can represent a lien creating title issues. Similarly, mortgages or easements can impact the title status in public records. Finally, government entities can file liens in real estate records due to unpaid taxes and open permits, clouding the title and preventing the ownership transfer.
Deed problems result from the inability of one party to sign legal documents due to mental incapacity. Furthermore, an invalid power of attorney (defective notarization, lack of witnesses) can make the deed incomplete. Any problem with the contract results in a title defect prohibiting the buyer from acquiring the ownership.