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Title Insurance And Title Reports Dont Be Afraid To Ask Questions

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As previously indicated, some of the attorneys at OWM Law (including yours truly!) are title agents for Fidelity National Title Insurance Company. In addition, we have a Title Coordinator and Title Assistant whose number one priority is helping the attorneys and their clients with real estate transactions, title searches and closings, conveyancing, etc. We provide “added extra value” to our real estate buyer clients by also providing them with title insurance, and conducting real estate closings. We utilize the same title insurance premium rates that all other licensed title insurance agents apply, while, at the same time, being more than competitive with all of the other real estate closings costs (i.e. notary fees, document preparation, fax transmissions, wire costs, etc.). During the course of our legal representation of real estate buyers, and the provision of title insurance, we provide the client/title insurance customer with a Title Insurance Commitment (i.e. title report). We encourage our clients, and title insurance customers, to feel comfortable to ask any and all questions that they have regarding what is usually the biggest purchase in their lives (i.e. their home or a real estate investment). Amazingly, a lot of real estate buyers never ask us anything about the title report.

A review of a typical title report typically reveals the following:

  1. The name of the proposed buyer.  Please review to make sure that we have the proper names (individual or corporate name?), the spelling of the names, ownership interest (i.e. married couple/tenants by the entireties? Unmarried couple – tenants in common or joint tenants with right of survivorship?);
  2. The name of the lender and the amount of the mortgage being given/loan taken in order to purchase the property;
  3. What liens are presently against the property and how we are going to work with the seller to satisfy same so that the buyer is purchasing the property free and clear of all mortgages, judgments, liens and encumbrances (except, of course, the mortgage for the loan that they are taking in order to purchase the property). The title report will often reveal old mortgages that should have been cleared when the seller purchased the property (or even long before that). The buyer should inquire as to what we are doing about those old mortgages, liens, judgments, etc.;
  4. If the seller is deceased, and his/her Estate is handling the transfer, the title report will reflect notice that the Estate’s death taxes (i.e. federal and state) must be cleared. The buyer should ask us, as their title insurance agent, how are we handling same and clearing the property from such claims;
  5. The title report will also reflect any and all recorded easements, rights of way, etc. While most of the easements and rights of way are those in favor of utilities (i.e. public sewer, public water, electric lines, oil and gas lines, etc.), the buyer should ask for copies of the recorded easements so that he/she/they know where the underground utility lines are buried. Older properties often have easements that were recorded 100 to 200 years ago and they, while usually interesting from a historical perspective, sometimes reflect significant limitations on what can be done with the property. The buyer should ask for copies of the recorded easements and should ask the title insurance agent to explain the importance of same; and
  6. Finally, the title report has a copy of the legal description attached which is the document with the metes and bounds of the property, the property boundary description, tax parcel number, approximate acreage, etc. While usually not a problem, the buyer should review the legal description to make sure that it “closes” (i.e. conforms with the buyer’s general idea of the size/shape/configuration of the property).

Before you purchase a property, please review the title report with your attorney and title insurance agent.  Contact OWM Law as we can provide you with both of these services.

— Written by David A. Megay, Esq.

DISCLAIMER: The contents of this blog are not legal advice, and are not to be used for that purpose.  If you are faced with a legal matter, you should contact a lawyer immediately in order to ensure that you are protected.

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