How to Not Make Mistakes With Titling and Ownership of Assets

You’ve worked hard to build wealth and obtain assets, so protecting them is vital. When your assets include real estate, you must be aware of mistakes that can occur with titling and ownership. Although these mistakes may seem innocent or minor, even small errors can significantly impact the selling or transferring of property. Knowing how to hold your real estate and the most common titling mistakes can help you avoid these potentially costly errors. 

You should know how to fix titling and ownership errors or mistakes when they happen. Of course, preventing them is even better. A financial advisor can help you find and fix mistakes with titling and ownership of assets if you’re struggling to remove or revise them.

Key Takeaways:

• There are several ways to hold titles to real estate; your property title must contain accurate information to make ownership clear.
• Correct information on title papers ensures you won’t lose your assets due to titling errors.
• Common mistakes with titling can prevent you from selling or transferring your property.
• Correcting and preventing mistakes on your titling ensures you maintain all legal rights to your assets.

What Are the Best Ways To Hold Titles to Real Estate?

Deciding how to hold the title to your real estate will depend on your situation and how you plan to use the property. Each titling method can affect how you can finance, improve, or use the property as collateral. Consider the following details about methods of titling your real estate and how they might fit your goals:

Joint Tenancy

Joint tenancy allows two people to own a property together. You both have the right to use the property; when one dies, the property transfers fully to the other owner. Neither owner can sell or transfer the property without the other party’s consent, and you share any profits from the sale equally.

Tenancy in Common

Tenancy in common is also joint property ownership. It differs from joint tenancy in that each owner has a title to their portion of the property. You can leave your part of the property to your heirs since it doesn’t have to pass to the joint owner. You can also sell your portion of the property without the other owner’s consent.

Tenancy by the Entirety

Married couples may choose tenancy by the entirety for their title when they buy a home together. With this titling, the state sees the married couple as one person. So, if one of the partners dies, the property can transfer to the other without any legal action or need for probate. If creditors come after one spouse, they can’t take a property titled as tenancy by the entirety, but if both spouses are sued, the creditor could come after the property.

Sole Ownership 

A sole ownership title means that only one person holds the title to a property. They can sell or transfer the property without the consent of any other parties. The downside of sole ownership is that if there’s no will, issues with transferring the property could arise upon the owner’s death.

Community Property

Only Arizona, California, Nevada, Texas, and Wisconsin have community property rules regarding property and married couples. With community property, a home, land, or other assets can transfer to the other spouse without going through probate if one of the spouses dies.

Why Is Titling and Ownership of Assets Important?

Correctly titling your properties is essential because it can protect you from creditors who may come after your assets for debts you owe or other legal matters. How you structure your property’s title significantly affects how protected the asset is. Ensuring that all the information on your title is correct is also vital for preventing the asset from being lost or seized for something like a misspelled name. Always carefully review your titling and ownership paperwork when buying or selling property.

What Are Common Mistakes With Titling?

Unfortunately, common mistakes can happen with titling. While some are minor, they can be difficult to revise. Knowing what to look for can help you spot areas that could become major issues.

Legal Descriptions

Legal descriptions explain a property’s details or its metes and bounds. A property’s boundaries determine the land you’re buying when you take over the title of a property. When a property’s legal description is incorrect on a title, it can be challenging to change. Once you’ve signed the document, you’ve technically agreed to what it stated, despite any errors.

Forgeries

Title forgeries do happen, and, when they do, it can be devastating. People forge titles for many reasons, including refinancing the home and taking equity money. A forged title can leave the true property owner in a bad position. If you don’t notice a forgery, the home’s true owner could end up in foreclosure because of unpaid mortgage payments they didn’t even know they had.

Public Record Errors

After you buy a property, a public records worker enters the title in public records. But they sometimes make mistakes. For example, they could enter your property’s address as 123 Garf Lane instead of 123 Garfield Lane. While this might seem like an innocent mistake, it could affect your ability to sell or transfer the property if no one corrects it.

Unknown Heirs

If the heir to your property is missing or you don’t know where they are, it could pose problems for transferring ownership after your death. And heirs contesting the will or claiming the property without a will could further complicate the transfer.

Undisclosed Liens

When a previous property owner doesn’t clear their debts, it could jeopardize you as the new property owner. Even if the debts aren’t yours, the creditors for the past tenant can put liens on your property, which often happens with distressed properties, especially those sold quickly.

Easements and Encumbrances

Once you own a property, you may learn about easements that allow government agencies or others to enter and use parts or all of your land. Easements are portions of land you must leave accessible to third parties. So you can’t develop that part of the property in a way that would prevent others from using it. Encumbrances, such as any third-party claims by financial institutions or restrictions limiting your property’s use, can also be an important part of titling. Learning about these issues after you buy a property is disheartening.

How Can You Correct Mistakes With Titling To Protect Your Assets?

Correct titling mistakes as soon as possible is vital, but this is sometimes easier said than done. If you notice a mistake in your title, you have three options for correcting it:

• A correction deed: You can use a correction deed, also called a corrective or confirmatory deed, to fix errors on a publicly filed property title. This type of deed only amends an existing deed to point out and correct errors on it, so you can’t use it to transfer the property.
• An affidavit of correction: If the error on your title is minor, you can file an affidavit of correction. These affidavits are usually for spelling errors and other minor mistakes.
• A quitclaim deed: When you can’t use one of the other methods to fix an error on a deed, you might use a quitclaim deed, which can remove someone with no financial obligation to the property from a title or correct other issues related to a property’s title.

If you try one or more of these methods and the title still has errors, you may need to speak to an attorney or financial advisor about your options.

How Can You Avoid Common Mistakes With Titling?

The best way to avoid common mistakes with titling is to review all your title paperwork carefully before you finalize anything. Having a solid estate plan and a financial advisor can also help eliminate errors in your titling and ownership of assets, as your advisor can spot and prevent errors from becoming an issue.

Let Anderson Advisors Help You Protect Your Assets

Titling and ownership mistakes can cost you a lot of time, money, and effort to fix. In some cases, you can even lose your property over errors on your title paperwork. Let the team at Anderson Advisors help you plan your estate and protect your assets so you can focus on building wealth and reaching your financial goals.