What is a title defect?

What is a title defect or encumbrance?

A title defect is a problem or omission associated with the title that impairs your ownership rights to the property. Possible title defects include errors or omissions in the public records, forgery, confusion caused by similar or identical names, signatures of minors, mental incompetence, fraud, incorrect marital status, etc.

For example, a title defect could be an undisclosed heir of a previous owner suddenly appearing to make an ownership claim on your land.

An encumbrance is a claim made upon the land by someone other than an alleged landowner. For instance, your local power company may have an easement - a limited right to use your property - to install electrical power lines to serve your house or your neighbor's.

While a utility easement is often an appropriate encumbrance, other encumbrances may not be acceptable. If you are borrowing money to purchase your house, your lender will want assurance that no one else has a claim against your house - the collateral for your loan. Therefore, your lender will require clear title - title free of any outstanding defect or unacceptable encumbrance - before approving the loan.