What Is a Title Defect in NH Real Estate?

🏡 What Is a Title Defect in NH Real Estate?

Before any home closes in New Hampshire, a title company or attorney conducts a title search to ensure the property is legally transferable.

If an issue is found that affects ownership, it’s called a title defect — and it must be resolved before the sale can move forward.

Here’s what NH buyers and sellers should know.

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What Is a Title Defect?

A title defect, also known as a “cloud on title,” is a legal issue that challenges or questions the rightful ownership of a property.

A title defect can:

✔ Delay closing

✔ Complicate financing

✔ Prevent the buyer from obtaining title insurance

✔ Stop the sale until corrected

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Common Title Defects in NH

New Hampshire closings may uncover several types of defects, including:

1. Unreleased Prior Mortgages

A past mortgage that was paid off but never officially discharged.

2. Liens or Judgments

Such as:

✔ Unpaid taxes

✔ Contractor mechanic’s liens

✔ Child support liens

✔ HOA or association liens

3. Boundary or Survey Disputes

Neighbors or previous owners disagreeing on property lines.

4. Missing or Incorrect Deeds

Errors in the deed, such as incorrect names, missing signatures, or improper recording.

5. Undisclosed Heirs or Ownership Claims

Especially in inherited properties or estates.

6. Easement Issues

Unrecorded or disputed rights-of-way, access, or utility easements.

7. Probate or Missing Authority

Seller lacks legal authority to sell (e.g., estate not fully probated).

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How Are Title Defects Discovered?

A title defect is usually identified during:

✔ A title search

✔ A review of public records

✔ Examination of prior transfers and encumbrances

✔ Survey or boundary checks

Title companies and NH closing attorneys perform these checks early in the process.

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How Title Defects Are Resolved

Depending on the defect, resolution may involve:

✔ Recording missing documents

✔ Paying outstanding liens

✔ Obtaining releases from contractors or creditors

✔ Filing corrective deeds

✔ Completing probate or legal authority

✔ Amending surveys

✔ Negotiating with third parties

The goal is to produce a clear and marketable title.

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Can You Close With a Title Defect?

Usually no — lenders will not fund a mortgage if a defect remains.

Cash buyers could close, but they would be taking on the risk and likely won’t receive full title insurance protection.

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Why Clear Title Matters

A clean title protects both buyers and sellers by ensuring:

✔ Full legal ownership

✔ No ongoing legal claims

✔ No future disputes

✔ Smooth financing and resale value

Title insurance also backs the buyer if an issue appears after closing.

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Bottom Line

A title defect is any issue that affects legal ownership of a property in NH. While these issues can delay closing, most defects can be corrected with proper documentation, legal work, or financial settlement — ensuring the buyer receives a clean, insurable title.

Jim Johnson — Real Estate Agent

58 NH Route 25A

Wentworth, NH 03282

P: (857) 249-7392

W: www.JimJohnsonRealEstateAgent.com

Licensed New Hampshire REALTOR® with Three Hills Real Estate Services

Broker Email: info@ThreeHillsRES.com

Broker Website: www.ThreeHillsRES.com