When it comes to buying real estate, understanding the title process is one of the least glamorous parts. Title companies will help with most issues, but it’s also essential for buyers to know what to look for.
A title report is part of the due diligence process and discloses the current ownership, restrictions, easements, and liens relating to a property. It also includes county and tax information.
Title insurance exists to ensure against potential title defects. A title company examines the history of a property to protect the buyer. Common examples of defects title insurance will protect against include:
A title company prepares a preliminary title report to list the items the company will not insure against. This report is prepared before issuing insurance to give a buyer a clear picture of a property’s history.
Every item within a title report should be reviewed—key sections to pay particular attention to include ownership rights, easements, and liens.
Ownership Rights: Understand the ownership interest being purchased as well as claims, restrictions or interests of third parties.
Easements: Review what easements exist and who else may have access to the property or a portion of it.
Liens: What claims do others have to the property. Liens must be cleaned up before closing escrow.
Always consult with your title company, attorney, and other specialists you’re working with to ensure due diligence when buying a new property.
A commercial broker like Evan Meyer can assist as a project manager when buying property. In addition, he provides expertise on title reports in real estate and represents both buyers and sellers. Learn about some of the services our team can provide in our previous blog entry.
