Buying/Reviewing: The Ultimate Guide to Safe Property Title Transfers
Buying a home is one of the largest financial investments most people will ever make. While finding the perfect house, securing financing, and negotiating the price are crucial, an often-overlooked, critical step in the process is reviewing the title report.
A title review is an essential step in any real estate transaction, involving a thorough examination of all documents related to the ownership history of the property. It ensures the seller actually owns the property and that no hidden issues will threaten your investment after closing. 1. What is a Preliminary Title Report?
The preliminary title report, often ordered when escrow is opened, reflects the recorded information regarding the property at a specific point in time. It is a document that identifies who owns the property, whether taxes are paid, and lists any liens, easements, or encumbrances. 2. Key Elements to Review in a Title Report
When reviewing a title report, pay attention to these critical sections:
Vesting (Owner Name): Confirms who is on the title and ensures all parties are available to sign the transfer documents.
Legal Description: Describes the exact boundaries and location of the property, which is crucial for accurate recording.
Special Exceptions (Liens and Debt): This section lists items that could hinder the sale, such as old debts, contractors’ liens, or unpaid property taxes that stay with the property.
Easements/CCNRs: These define what a buyer can do with the property, including utility access or HOA restrictions.
Deeds of Trust: Shows existing mortgages that must be paid off to provide a “clean” title. 3. Why Proper Review Protects the Buyer
If a title is not properly reviewed, you could discover after the purchase that someone else has a legal claim on your property. This can lead to: Lawsuits over boundary disputes. Unexpected expenses to pay off old debts. Loss of investment due to invalid ownership. 4. Tips for the Buying/Reviewing Process
Use a Title Contingency: Utilize a form, like a Form 22T, to allow yourself time to review the report and back out if significant, unresolved issues are found.
Consult a Professional: While agents can help, title officers are available to answer complex questions regarding specific, high-risk items.
Check for Hidden Issues: Look out for boundary disputes, clerical errors, and unpaid property taxes.
Address Entity Issues: If the seller is a trust or LLC, ensure all necessary documentation is in place to verify signing authority.
By performing a thorough title review, you can move forward with confidence, knowing your new property is legally sound and free of hidden liabilities.
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