Introduction

Even a single title defect can stop a loan from funding on closing day. Lenders require a clean title (or acceptable title insurance protections) because unresolved claims affect the lender’s security interest. The Consumer Financial Protection Bureau explains that title issues are a common cause of closing delays and require curative steps before closing can proceed (CFPB: https://www.consumerfinance.gov/ask-cfpb/what-is-a-title-problem-that-can-delay-my-mortgage-closing-en-216/).

Common title problems and how they typically get fixed

  • Unreleased or unpaid mortgages and deeds of trust — Solution: request a payoff and recorded release from the prior lender; time: usually 1–3 weeks if documents are available.
  • Mechanic’s or contractor liens — Solution: negotiate payoff, obtain lien release, or escrow funds; time: 1–4 weeks depending on negotiations.
  • Tax liens (federal, state, local) — Solution: pay or arrange a lien satisfaction; time: 2–6+ weeks if tax clearances are needed.
  • Judgment liens and creditor claims — Solution: satisfied or subordinated via payoff; time: 1–4 weeks.
  • Boundary disputes and encroachments — Solution: boundary survey, agreement, or quiet title action; time: 2–8+ weeks for complex disputes.
  • Missing heir or probate issues (clouded by unrecorded transfers) — Solution: probate completion or corrective deed; time: several weeks to months.
  • Recording errors, misspelled names, or missing signatures — Solution: corrective documents filed with the recorder; time: 1–4 weeks.
  • Forged deeds or chain-of-title gaps — Solution: title curative litigation or title insurance claim; time: varies—often longer and may require court action.

How lenders and title companies handle problems

  • Title search and commitment: The title company searches public records and issues a title commitment listing exceptions that must be cleared.
  • Curative work: Title companies, attorneys, or sellers resolve exceptions by obtaining releases, corrective deeds, or liens paid off. Sometimes lenders allow an escrow or holdback for minor issues pending clear resolution after closing.
  • Title insurance: Purchasing an owner’s and lender’s title policy protects against many hidden defects. See our guide to title insurance for details: title insurance.

In my practice I’ve seen closings delayed by a single unrecorded lien or a stray judgment. One client discovered a $10,000 contractor lien the week before closing; we negotiated a reduced payoff and used an escrow holdback so the loan could close within two weeks.

Practical steps to prevent or limit delays

  1. Order an early title search—don’t wait until underwriting is complete.
  2. Require payoff statements from sellers for any prior mortgages or HELOCs.
  3. Ask the title company for a preliminary title report as soon as contracts are signed.
  4. Buy title insurance and consider endorsements when the lender requests extra coverage. Our article on avoiding title curative delays shows quick fixes that often help: avoiding title curative delays.
  5. Use a licensed real estate attorney for complex chain‑of‑title issues or probate concerns.

Real-world examples

  • Contractor lien: A seller’s unpaid remodeler filed a lien after closing paperwork began. We obtained a reduced payoff agreement and a release so the lender accepted the curative work.
  • Boundary dispute: A neighbor claimed a fence encroached across a lot line. The parties agreed to a survey and boundary line agreement; closing moved once the survey and recorded agreement were on file.

Common misconceptions

  • “Title insurance solves everything”: Title insurance protects against many hidden defects but won’t retroactively fix some problems without a claim process.
  • “Minor issues won’t stop closing”: Lenders often refuse to fund until defects affecting their lien priority are resolved or insured against.

If you discover a title issue right before closing

  1. Notify your lender, title company, and real estate attorney immediately.
  2. Ask for a written explanation of the title exception and recommended remedy.
  3. Request an escrow holdback or temporary agreement only if the lender and title insurer accept it.
  4. Keep written payoff/clearance records and monitor recording with the county recorder.

Timelines and expectations

Timelines vary by issue complexity and local recording offices. Simple payoffs and corrective deeds often clear in 1–3 weeks; disputes, probate, or litigation can take months. Build buffer time into your closing schedule and insist on early title work to reduce surprises.

Further reading and authoritative sources

Professional disclaimer

This article is educational and reflects general practices as of 2025. It is not legal advice. Consult a qualified real estate attorney or title professional for guidance specific to your transaction.