Defective Title – Definition

Cite this article as:"Defective Title – Definition," in The Business Professor, updated September 15, 2019, last accessed June 2, 2020, https://thebusinessprofessor.com/lesson/defective-title-definition/.

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Defective Title Definition

A defective title describes a property that has a constraint, hindrance or drawback placed on it, which could be a mortgage, lien or judgement. Any property or assets whose real ownership cannot be proven by legal documents as a result of publicly-recorded defect or encumbrances that is placed on it is a defective title. When the ownership of a property or asset cannot be proven, the other party cannot claim such assets, neither can it be sold. The defect or encumbrance on such property or asset must first be settled before the property can be clear.

A Little More on What is Defective Title

A property with a defective title cannot be transferred or sold to another party, this is because of the defect or encumbrance that exists on the property. A defective title impedes the verification of the real owner of a property or asset, thereby making the title not marketable. Before the title holder can be cleared or the property transferred or sold, all defects or encumbrances must be cleared.

Ways a Defective Title Can Disrupt a Transaction

Any individual that sells a property with a defective title will be held responsible for such transactions. Transferring or selling a property with a defective title can make the seller lose the title on the property. This is because it is difficult to ascertain the real owner of a property with a defective title. In a transaction involving the sale of property, difficulty in establishing who the real holder of a real estate title can shatter the transaction.

There are many things that can cause an encumbrance on a real estate property, these include error in the document, uncertainties in the wordings of the title, incorrect or inconsistent signatures, and others.  A defective title can also be as a result of missing or damaged deed, inadequate description of a property in a de that brings confusion about the actual property being referred to can cause a defective title.

A defective title can be rectified through a title search which is carried out to ascertain the real owner of a property. There are other legal ways to determine the true owner of a property such as a legal action called a ‘quiet title.’

Reference for “Defective Title”

https://www.investopedia.com › Personal Finance › Mortgages

www.businessdictionary.com/definition/defective-title.html

https://dictionary.cambridge.org/dictionary/english/defective-title

https://www.law.cornell.edu/wex/defective_title

https://thelawdictionary.org/defective-title/

https://thelawdictionary.org/defective-title/

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