What is considered a title defect?

A title defect refers to any issue that may affect the ownership or claims on a property. This encompasses a wide range of potential problems like liens, encumbrances, defects in the title chain, and unresolved claims. Such defects can impact the ability to transfer ownership or the marketability of the property, leading to legal disputes or financial loss for property owners.

For instance, if there is a lien against the property that hasn’t been resolved, it could prevent a sale from occurring or create additional costs for the buyer after the purchase. This understanding is crucial for anyone dealing with real estate transactions as it highlights the importance of conducting thorough title searches and obtaining title insurance to protect against any unforeseen issues.

The other options, such as favorable modifications to a title policy, a history of a previous mortgage, or a standard real estate disclosure statement, do not inherently represent defects in the title itself. Rather, they may relate to standard practices or documents in real estate transactions but lack the potential to disrupt ownership rights directly.