What Happens When a Nevada Real Estate Closing Fails Because of a Title Problem?

The preliminary title report

Early in escrow, the title company issues a preliminary title report listing liens, easements, and exceptions it will not insure. The buyer reviews it during the contingency period and can object in writing to items that impair title. This is the buyer's main protection, so read the exceptions, not just the summary.

Common title problems that stall closings

The usual culprits:

• Old deeds of trust paid off but never reconveyed
• Mechanic's liens from unpaid contractors (NRS 108)
• Judgment liens against the seller
• Delinquent HOA assessment liens
• Missing signatures from a co-owner, spouse, or heir
• Errors in legal descriptions or gaps in the chain of title
• Boundary encroachments revealed by survey

The seller's duty to cure

Most defects are fixed at closing: escrow pays off liens from sale proceeds. Others take more time, like tracking down a lender to record a reconveyance or getting a co-owner's signature. Contracts often allow a short extension for cure. A seller who refuses to cure a curable defect may be in breach.

Buyer options when title cannot be cleared

Depending on the contract, a buyer can:

• Agree to extend closing while the seller cures
• Cancel and recover the earnest money
• Waive the defect and close, sometimes with a price reduction
• Pursue the seller for damages or specific performance if the seller refuses to cure

When a court action is needed

Some defects require a judge: a disputed lien, a wild deed, an adverse possession claim, or heirs who cannot be found. A quiet title action under NRS 40.010 resolves competing claims and lets the title company insure. These typically take months, so many buyers cancel rather than wait.

Protecting yourself

Buyers should buy an owner's title insurance policy and review exceptions with counsel. Sellers planning to list should order a preliminary title report early, especially for inherited, divorced, or long-held property, so problems are fixed before a buyer is waiting.