5 Typical Issues You Might Encounter with Property Titles

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In real estate, a property title refers to collective rights as they relate to a specific piece of property reflect a party’s interest and rights. To simplify this in more basic terms, it’s a legal document naming the legal owner of a specific property. 

There are several types of home ownership in Canada, including freehold, leasehold, co-ownership, joint tenancy, tenancy in common and in-trust partnership. 

When purchasing property, obtaining the property title is not always cut and dry. Occasionally, there are issues that will arise and impede the process. While you hope to never experience any issues when obtaining the property title, the more information you have about the ins and outs of the process, the better. Having some general awareness of potential roadblocks that may occur will give you the peace of mind in having less surprises down the road. 

The experts at Royal LePage Your Community Realty have assembled a list of the 5 most common issues that you may encounter with property titles, covering existing liens, encroachment issues, title fraud, legal use or zoning problems and mistakes with public records. 

Existing liens 

Per Investopedia, a property lien is defined as “a legal claim on assets that allows the holder to obtain access to the property if debts are not paid”. 

Liens against property can refer to anything that constitutes a relevant outstanding debt, including things like property-related unpaid debts and outstanding taxes. These liens must be addressed and cleared before the property can be taken over under new ownership - if not, the new owner will assume responsibility for those liens as they carry over to the new owner.  

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Encroachment issues

In real estate terminology, an encroachment refers to a physical imposition of something like a neighbour’s fence over the property line or a deck that encroaches over a neighbour’s lawn - there are several ways in which an encroachment issue can arise, but in any case, it is something that will need to be addressed prior to obtaining the title on property.  

In the case of encroachments, there can sometimes be easements or agreements in place, which, depending on the details, will flow with the property and hold as the property title switches over to the new owner. 

Title fraud

As the name suggests, title fraud relates to intentional fraudulent representations of a property - things like forged documents or stolen documents can reflect title fraud that was performed without the current owner’s knowledge or participation. Realtors’ and lawyers will do checks and in-depth searches to verify identification, documentation and claims on ownership to ensure no red flags or fraudulent behaviours are found. 

One common title fraud scheme involves the theft of a title to a property. Those committing the fraud will “sell” the home or apply for a new mortgage against the home - identity theft usually precedes title fraud, in which your personal information is stolen in order to facilitate the title fraud which may follow.  

Legal use or zoning problems

In some cases, a seller’s use of a property will be in conflict with zoning bylaws and this can cause issues in legal use or zoning. One example of this is a seller using a commercial space as a residential loft. Another would be a homeowner renting out a room as a bedroom when the space does not meet the legal criteria to be qualified as such. 

While missteps in legal use or zoning are not always done so intentionally, they are problematic and must be addressed. 

Mistakes with public records

Errors in paperwork such as public records is not unheard of, because ultimately, you’re dealing with human error. This doesn’t mean the same thing as fraud, as mistakes with public record occur unintentionally, but still present an issue which can complicate the sale of a home if not caught and addressed correctly. 

One example of a mistake with a public record that could affect the sale of a home would be an error in the record of property lines - and an error like this would then also affect things like your home’s appraisal, where the valuation is done based on inaccurate information. 

For any real estate transaction to be successfully completed and in line with all existing local real estate regulations, a property title must be completed. In Ontario, a search on title is the process where a search of records is done to confirm legal ownership of a property. Title searches will also confirm the legal description of a property and bring to light any liens, charges, encumbrances or existing claims. This title search is a vital component in the real estate process, as it ensures transparency on the property in question and protects the seller from any future surprises or issues that need to be resolved prior to completing the process. 

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The best tool you can have in any real estate translation is the guidance, support and expert advice of professionals who are trained, certified and experienced in their specific area - professionals like a real estate agent, property inspector, property appraiser and property lawyer. In protecting yourself and your financial investment with the right team of support you will save yourself time, potential costly legal issues and ensure a smoother experience through the whole process. 

As you take those first steps in the process of selling your home, protect yourself against potential issues from the getgo by reaching out to an expert at Royal LePage Your Community Realty. Our team of award-winning real estate professionals is ready to assist you in meeting all of your property goals with a stress-free and seamless process.  

Royal LePage Your Community Realty is Canada’s largest independently-owned Royal LePage franchise, with over 1000 agents and 10 office locations to serve you and your clients. 

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