Steering Clear Of Title Trouble

When stage great Helen Hayes died in 1993, her son, James MacArthur, inherited her Victorian mansion overlooking the Hudson River in Nyack, N.Y. MacArthur arranged to sell the house for $730,000 to Christopher and Georgine Chalsen, who planned to live there with their five children. A few weeks before the scheduled closing last June, a title researcher found buried in the public records a 29-year-old right of first refusal that Hayes had granted to a neighbor. After much frustration and weighing of legal options, MacArthur honored the agreement, and the neighbors bought the house. They removed a strip of land connecting the Hayes property and their own to the river bank and put the house back on the market at $849,000. With the river access gone, the Chalsens declined to pursue a deal.

The fiasco over the Hayes mansion, known as Pretty Penny, is an example of how a defective title can kill a real estate deal that both parties badly want to complete. No matter how much you feel that you've finally found your dream home, don't get in too deep unless you're sure the house clearly belongs to the seller or that you won't get involved in a bottomless legal pit. Refusal rights, liens, easements, or boundary disputes are the type of problems to watch out for.