It’s important for you as a homebuyer to know that the title is clear before you take possession of it. A title insurance company’s goal is delivering a house with clear title so they won’t have to pay future claims to you. With that in mind, running a title search will be your title insurance company’s first priority (or your attorneys depending on the requirements of your particular state).
The title search includes searching through the prior fifty years of official records for information relating to the house, including all prior deeds, last will and testaments, divorce decrees, trusts, bankruptcy cases, court judgments, and tax records. Statistics indicate as much as 35 percent of houses can have a fault with their title.
When a title company issues a preliminary title report ( also called a title insurance commitment or encumbrance report ), you have the chance to fix issues before going ahead with the sale – or to cancel the deal if something major shows up. You may also learn about the conditions in which title will be insured. In examples where unknown or unresolved issues can’t be resolved, your title company will exclude these from coverage.
The preliminary title report should be given to you, your property agent, and lawyer by your closing agent. Make an effort to thoroughly review it and check with your lawyer or closing agent about items you aren’t clear about. If your report makes mention of recorded documents like easements or building-and-use-restriction, get copies so that you can study them.
In addition, a preliminary title report ought to include a plat map which points the houses boundaries when the land was initially subdivided. Confirm if the map has dissimilarities between what was initially divided to what you discover today. But utilize this map merely as a general rule of thumb since only a professional surveyor can show you the exact boundaries of the home. Whenever your report shows there is an easement, be sure to ask your title company or lawyer to point out to you where they are on the plat map.
If you have future plans for the prospective house such as building a backyard swimming pool, be sure to examine the preliminary title report for any restrictions or easements that may prevent you from building a pool. It’s important to share all your future plans for the property with your closing agent, attorney, or real estate agent.
Luckily you will not have to deal with absolving any flaws with title. Your closing agent will advise the seller’s Realtor of the defect and require all liens or flaws to be absolved and liquidated from the sellers earnings at closing.
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