Owning real estate in South Carolina comes with privileges and responsibilities. For many people, it comes with questions as well. For example, many people have questions about what it means to hold “title” to a piece of real property. How is titled property different from non-titled property? What is title insurance? Do you need it? What does it mean to hold a “good” title?
What Does it Mean to Hold Title to Real Estate in South Carolina?
When you buy most things, simply having it in your possession is enough to convince the world (or at least most reasonable people) that it is yours. But, to prove that you own a piece of real estate, you also need a piece of paper which serves as evidence of your purchase. This is your title. During the closing process, the seller with sign a document transferring the title to you, and you will sign separately to acknowledge your purchase of the property.
As the “title owner” of real estate in South Carolina, you are entitled to use your property as you see fit, subject to any relevant restrictions. This may include restrictions such as easements that are recorded with your title, city or county zoning and land use restrictions, and/or restrictions imposed by your homeowner’s association (if you have one).
What Does it Mean to Hold “Good” Title in South Carolina?
When you buy a home, commercial property, or piece of undeveloped land, in most cases you want to make sure that you are purchasing “good” title. In this context, “good” means that the title is valid and actually pertains to the property you are purchasing (in other words, the seller actually owns the property he or she is selling). While it may seem obvious that a seller would own the property, issues come up more often than you might think, and this is why conducting a title search and purchasing title insurance are important parts of the real estate acquisition process.
In South Carolina, What are the Differences Between Good Title, Marketable Title, and Insurable Title?
Depending on the type of property you are purchasing, during the process of conducting your due diligence and dealing with your real estate and insurance agents, you may hear references to “good title,” “marketable title,” and “insurable title.”
“Good title” and “marketable title” are often used interchangeably. To say that a real estate owner holds marketable title is to say that he or she holds a title that has a clear chain of ownership and that is free from any other defects (we’ll discuss defects more later). In contrast, to say that a property owner’s title is “insurable” is to say that there are known defects in the chain of title, but the title is still capable of being insured. An example of a situation where a title might be insurable but not good or marketable would be where there is an old undischarged mortgage against the property from a previous owner several links down the chain of ownership. In this scenario, a title insurer may be willing to insure against the minimal risk that the prior owner’s mortgage company will seek to foreclose on the property.
How Can Title to Real Estate Be “Not Good”?
We just discussed one example of a situation where a title would be considered “insurable” but not “good.” In addition to old defaulted mortgages, other potential title defects that could prevent a purchaser from obtaining good (or marketable) title include:
- Boundary and Survey Issues – If the survey of your property is inaccurate, a boundary dispute with a neighboring property owner could result in costly litigation.
- Errors in the Public Record – Clerical and administrative errors at the state, county, or city level can lead to defects that impair a property owner’s ability to obtain a marketable title.
- Forgery, Fraud, or Impersonation – Forgeries, fraud, and impersonation of property owners can lead to invalid sales and conflicting claims of ownership.
- Property Owner Divorce – Under South Carolina law, when spouses divorce, each spouse may be entitled to a share of the couple’s real property irrespective of what is stated on the property’s title.
- Unknown Easements and Other Encumbrances – Easements and other encumbrances should generally be recorded on the public record, and unknown encumbrances can impair property owners’ ability to make use of their property.
- Unknown Heirs or Beneficiaries – If a prior owner left the property to an heir or beneficiary in his or her will and this transfer was not recorded, then it will not show up in the chain of title.
- Unknown Liens – Along with mortgages, other types of liens can impair a property’s title as well.
Is it Possible to Cure Title Defects and Obtain Good Title?
Yes. Most, but not all, title defects are capable of being cured. However, the steps that must be taken in order to cure a defect can vary greatly in scope and complexity. For example, if there is an error in the public record, curing the defect may be a simple matter of dealing with the appropriate government office to correct the issue. On the other hand, if there is an unknown easement or lien on the property, then curing the default may mean working out a resolution with the easement or lienholder – or potentially even seeking to clear your title through litigation.
What if you do not discover a defect until after you purchase a piece of property in South Carolina? This is where having a good title insurance policy comes into play. Ideally, your insurance company will acknowledge the defect and uphold the terms of your policy. Unfortunately, this does not always happen, and in many cases property owners will need to hire an attorney to deal with their title insurer.
Speak with a Real Estate Lawyer in Summerville, SC
If you are buying or selling a piece of property in South Carolina and would like to speak with an attorney about curing a title defect or obtaining good title, we encourage you to contact us for a confidential consultation. To request an appointment with attorney Patrick R. Watts, please call 843-851-7050 or inquire online today.