Breach of Warranty
A breach of warranty happens when a seller cannot pass a clear title to a buyer. When sellers put a property on the market, they are providing a guarantee that they possess a clear title to that property. When a buyer makes an offer on a given property, he or she assumes the seller has the clear title, based on that guarantee. Title searches will determine whether or not the seller actually has a clear title to the property. If the title company finds a problem, the seller is in breach of warranty. Once the buyer knows about breach of warranty, he or she can walk away from the sale. In some cases, this breach does not have to stop the sale; the seller may need to take action to clear the title, and if that works, the buyer can still purchase the property.