A real estate transaction in Illinois may proceed smoothly until a title issue arises. Even with financing secured and closing preparations underway, a title commitment can reveal a defect that jeopardizes the deal. Title issues are significant, as they impact legal ownership, marketability, and insurability. We advise clients to identify and address title problems early to prevent delays or failed closings.
Illinois law requires that a seller convey a marketable title unless the contract states otherwise. A marketable title means ownership free from reasonable doubt and substantial defects. If a defect exposes a buyer to litigation or loss, a purchaser may have the right to refuse closing. The Illinois Conveyances Act, 765 ILCS 5/1, governs the transfer of real property and sets standards for valid deeds. When a deed is improperly executed or recorded, ownership questions can arise.
Unreleased Mortgages And Liens
One of the most common title defects involves unreleased mortgages or liens. Under 765 ILCS 905/2, a mortgage must be released of record upon satisfaction. If a lender fails to record a release, the title search may still show an open lien. This can prevent the issuance of title insurance and delay closing.
Mechanics liens under the Illinois Mechanics Lien Act, 770 ILCS 60/1, present another risk. Contractors and subcontractors may file liens for unpaid work. Even if a seller disputes the claim, the lien clouds the title until it is resolved or bonded off.
Judgment Liens And Pending Litigation
Judgment liens can attach to real estate owned by a debtor. Under 735 ILCS 5/12-101, a recorded judgment becomes a lien on the debtor’s real property in that county. Buyers acquiring property subject to a judgment lien may inherit serious legal exposure.
Pending litigation involving the property can also derail a deal. A “Lis Pendens” filed under 735 ILCS 5/2-1901 provides notice of a lawsuit affecting title. Title companies typically refuse to insure over active litigation.
Boundary And Survey Disputes
Boundary disputes can create uncertainty about what is being conveyed. An inaccurate legal description or encroachment revealed by a survey can lead to objections. Under 765 ILCS 5/9, deeds must contain sufficient legal descriptions to identify the property. Errors in prior deeds may require corrective instruments.
Encroachments, including fences, driveways, or structures crossing lot lines, can raise lender concerns. Unresolved, these issues may lead buyers to withdraw or seek price reductions.
Probate And Heirship Complications
When property is transferred through inheritance, title depends on proper probate procedures. The Illinois Probate Act governs the administration of estates. If an estate was never opened or heirs were not properly identified, the title may be incomplete.
Affidavits of heirship can clarify ownership in some cases, but formal probate is often necessary. Without a clear chain of title, transactions may be indefinitely delayed.
Marketable Title Frequently Asked Questions
What Is A Marketable Title In Illinois?
Marketable title refers to ownership free from reasonable doubt and substantial defects. A buyer should not be forced to accept a title that exposes the property to litigation or serious claims. Illinois courts have long recognized that sellers must provide a marketable title unless the contract states otherwise. If a defect materially affects value or use, a buyer may object before closing.
Can A Sale Close If There Is An Open Mortgage On The Record?
An open mortgage typically must be paid and released before or at closing. Under 765 ILCS 905/2, lenders must provide a release once the debt is satisfied. If the release is not recorded, escrow arrangements may be required to ensure payoff and proper documentation.
How Do Mechanics’ Liens Affect A Real Estate Deal?
A mechanics lien recorded under 770 ILCS 60/1 clouds title and may prevent title insurance from being issued. Buyers and lenders typically require resolution before closing. The lien can be bonded off or settled, but it must be addressed.
What Happens If A Deed Was Improperly Executed?
A deed must meet statutory requirements under 765 ILCS 5/1 and 765 ILCS 5/20, including proper acknowledgment. If execution defects exist, a corrective deed or court action may be necessary. Without correction, title insurance may be denied.
Can Title Insurance Protect Against All Defects?
Title insurance covers specific risks, such as undisclosed liens or recording errors, but does not resolve defects. Policy exceptions may limit coverage. Careful review of the title commitment is essential before closing.
Protect The Transaction With Covert Marrero Covert LLP
We collaborate with title companies to review commitments, identify objections, and take corrective action. Early review of title documents reduces risk. Solutions may include corrective deeds, lien releases, probate filings, or quiet title actions. Covert Marrero Covert LLP
Title defects can disrupt even well-planned transactions. We assist buyers, sellers, and investors in resolving title disputes and protecting property rights.
For assistance with title review and resolving real estate title disputes, contact our Illinois real estate attorney at Covert Marrero Covert LLP by calling us at (630) 717-2783 to schedule your initial consultation. Offices in Warrenville, Schaumburg, Naperville, and Joliet serve clients across the Chicagoland metro.
