Understanding property ownership, title issues, and how liens affect deals—the hidden deal killers.
Title is the legal right to own, use, and transfer property. When you buy a property, you're buying the title—the bundle of ownership rights.
No disputes, liens, or defects. The property can transfer freely to a new owner.
Has issues that must be resolved before the property can sell. Common deal killer!
A lien is a legal claim against a property that must be paid off when the property sells. Liens "attach" to the property, not the person.
The loan balance owed to the bank. First priority—always gets paid first.
Unpaid property taxes. Can lead to tax foreclosure. Super-priority in most states.
Federal or state tax debt. IRS has 120 days to redeem after foreclosure sale.
Filed by contractors/laborers who weren't paid. Common on renovation projects.
From lawsuits—creditor won and attached a lien. Can be from credit cards, medical debt, etc.
Unpaid homeowner association dues. Can lead to HOA foreclosure.
Owner died and property must go through court to transfer. Can take 6-18 months.
Both spouses must agree to sell. One can block the sale without court order.
Neighbor claims part of the property. Requires survey and possibly lawsuit.
Inherited property but not all heirs signed. Everyone on title must sign.
Utility company or neighbor has right to use part of property. Usually not a dealbreaker.
Structure (fence, shed) crosses property line. May need to be removed.
Most liens get paid from sale proceeds. Title company handles this automatically.
Many lien holders will accept less than owed, especially judgment creditors. 50-70% is common.
Old liens sometimes get released if creditor agrees or statute of limitations expired.
If liens exceed equity, seller must bring cash to closing or short sale.
"How much do you owe on the mortgage?"
"Are the property taxes current?"
"Is the property in probate or do all owners agree to sell?"
"Are there any judgments or liens against the property?"
"Is there an HOA and are dues current?"
Title insurance is a one-time fee that protects the buyer (and lender) against title defects discovered after closing.
Protects the buyer. In Texas, seller typically pays. Cost: ~0.5-0.7% of purchase price.
Protects the lender. Buyer pays if financing. Cash buyers don't need this.
Liens exceed equity — No room to pay everyone off
Probate not filed — Could take a year+ to clear
Missing spouse — Can't close without both signatures
IRS lien — Complex 120-day redemption period
Lis Pendens — Active lawsuit affecting property
Title issues are hidden deal killers—always ask about mortgages, liens, and ownership during your first call. The title company will do a full search, but knowing the basics helps you identify problems early. If liens exceed equity, it's usually a dead deal unless the seller brings cash to close.