What Happens if a Title Defect Is Discovered After Closing?
Buying property often feels final once the closing documents are signed and recorded. Unfortunately, some problems do not surface until after the sale is complete. A title defect discovered after closing can create confusion, financial risk, and legal headaches for a new property owner.
Understanding what a title defect is and how Texas law addresses these issues can help you respond quickly and protect your ownership rights.
What Is a Title Defect?
A title defect is any issue that clouds or challenges your legal ownership of a property. These problems typically relate to past ownership, unpaid obligations, or errors in public records.
Common title defects include:
Undisclosed liens or judgments
Errors in prior deeds or legal descriptions
Missing signatures or improper notarization
Unknown heirs claiming ownership
Boundary or easement issues not identified before closing
Many title defects originate years before you purchased the property and may not be obvious during a standard transaction.
Why Title Defects Sometimes Appear After Closing
Even with a title search and insurance in place, defects can surface later due to:
Recording mistakes in county records
Fraud or forged documents in the chain of title
Liens that were filed but not properly indexed
Incomplete probate proceedings involving a prior owner
Once discovered, the defect can affect your ability to sell, refinance, or fully use the property.
How Texas Law Treats Post-Closing Title Defects
Under Texas property law, a title defect does not automatically invalidate your ownership. However, it can create legal uncertainty until the issue is resolved.
Your options depend on the nature of the defect and whether you purchased title insurance.
The Role of Title Insurance
If you obtained owner’s title insurance, it may provide coverage for many post-closing title defects. Title insurance typically covers:
Legal defense costs if ownership is challenged
Payment to resolve covered liens or claims
Compensation if the defect causes financial loss
Once a defect is discovered, the first step is usually to notify the title insurance company and file a claim. The insurer then evaluates whether the issue falls within the policy’s coverage.
It is important to note that not all defects are covered. Certain exceptions listed in the title policy may exclude coverage.
If you are unsure whether you have title insurance, start by reviewing your closing documents. An owner’s title policy is typically listed as a one-time charge on the settlement statement, and many policies include a file or GF number issued by the title company. If you no longer have those records, the title company that handled your closing can usually confirm whether coverage exists.
What if You Do Not Have Title Insurance?
Without title insurance, resolving a title defect often becomes the property owner’s responsibility. This may involve:
Negotiating lien releases or corrective documents
Filing a quiet title action to clear ownership issues
Addressing boundary or easement disputes through legal action
Resolving probate or heirship claims
These processes can take time and may require court involvement, especially when multiple parties assert competing rights.
Steps to Take If You Discover a Title Defect
If a title issue arises after closing, acting quickly is critical.
Review your title policy and closing documents
Notify the title insurance company, if applicable
Gather all relevant records, including surveys and deeds
Consult a real estate attorney to evaluate your options
Avoid selling or refinancing until the issue is addressed
Delaying action can increase costs and complicate resolution.
Why Legal Guidance Matters
Title defects are often technical and fact-specific. Small details in recorded documents can determine whether a defect is easily fixed or requires litigation.
A real estate attorney can help you:
Determine whether the defect is covered by title insurance
Communicate with insurers, lienholders, or opposing parties
File corrective instruments or court actions when necessary
Protect your ability to sell or refinance the property
Protecting Your Ownership After Closing
Discovering a title defect after closing can be frustrating, but it does not mean you are without options. With prompt action and the right legal support, many title issues can be resolved before they cause lasting damage.
LDG PLLC assists Texas property owners in resolving title defects, protecting ownership rights, and navigating post-closing property disputes. Contact us to discuss your situation and take the next step toward a clear title.