When you purchase a home, the title company will send you a copy of the title report before closing. The review of this document and all attachments should be a contingency in your contract. Here are some tips on what to look for:
Premium / Coverage – Are the Sales price and Loan amounts accurate?
Proposed Insured(s) – Is buyer’s name spelled exactly as appears on the Purchase and Sale Agreement (P&SA) AND the loan documents? Is the lender’s name/clause correct as “proposed insured”?
Vesting – Is your seller “vested?” If not, is there a Real Estate Contract, Probate . . . in the special exceptions? If the vesting doesn’t match your P&SA, check with your seller and then your Title Officer.
Legal Description – Does the legal description match the P&SA? Does the legal description on the Deed of Trust match the Title Report? If not STOP, and find out why.
CCR’S (Easements, covenants, conditions, restrictions, reservations) – Permanent exceptions that STAY with the property. Be sure you receive copies of ALL exceptions to send to the buyers with a copy of the Title Report.
Real Estate Taxes – Affects our property only? If not, what is other property? Are taxes delinquent? How long? (Foreclosure costs!) Is value based on land only? (Possible omits!) Is tax based on an exemption? (higher tax liability upon sale!) Are taxes deferred? (back taxes due upon sale!)
Assessments – Is this an annual Assessment? Is this an on going maintenance assessment? (ie: Homeowners Association)
Money Encumbrances – Deeds of Trust – was it paid off by a subsequent loan or sale? Private party Deeds of Trust – do they have the original Promissory Note? If not, check with the Trustee for their requirements and additional Reconveyance fees. Real Estate Contract – is there a Warranty Fulfillment Deed? Be sure to get a copy of it PRIOR to payoff! Judgments – is there a question of Identity? If yes, have party complete a Statement of Identity and fax to Title Company. If our party, contact attorney for payoff and Satisfaction of Judgment. Federal Tax Liens – contact IRS for payoff. Mechanics Liens – contact claimant. DON’T FORGET TO GET A RELEASE OF THE LIEN.
Inspection results – Do you have ALTA clearance? (Lender requirement) Look on commitment and then for a supplemental. If the Inspection is listed in the Exceptions, it is NOT clear, call your Title Officer. If it is listed in the Notes, you have ALTA clearance. DO NOT CLOSE WITHOUT ALTA CLEARANCE FOR THE LENDER!
Notes – Be sure that the property address is shown and it matches the P&SA. Make sure matters against the names of the Buyer have been cleared. You should always find an abbreviated legal description in the Notes section.
Miscellaneous – If you don’t know what it is or what it means, ALWAYS call the Title Company and find out!