Title Defect

Real Estate Investing Glossary – Malone Global University

Definition

A Title Defect is any issue in a property’s chain of title that prevents the owner from having clear, marketable ownership or that creates uncertainty about ownership rights. Title defects are often referred to as a cloud on title.

In simple terms: something is wrong in the property records that makes ownership unclear.

Common Types of Title Defects

Why Title Defects Matter

How Title Defects Are Discovered

How Title Defects Are Cured

Title Defect vs. Title Exception

Title Insurance and Coverage

Title insurance can protect against certain undiscovered defects, but it typically will not cover items listed as exceptions in the policy.

Example

An investor buys a property and later discovers an old mortgage was never properly released. The lender refuses to refinance until the defect is cured. The owner works with the title company and prior lender to record a satisfaction, clearing title.

Common Pitfalls

Investor Checklist

Related Terms

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