One of the most frequent questions we receive from realtors involves the status of title to the property. The answer to the question “how is title” can be a source of great anxiety or a source of great relief. As a result, most people involved in any real estate transaction want the answer to that question as soon as possible. In order to answer that question, your closing agent must first perform a title search, which search results in a title commitment. The title commitment can be prepared as soon as 24 hours after it has been ordered, but in most cases takes a few days. Once your closing agent receives the commitment, they generally review it (hopefully very carefully) shortly thereafter, and send it to the parties as soon as possible to begin any contractual title objection window.
If there are issues, many closing agents will identify those issues when they first send the commitment, either in the form of a formal title objection (if the issues are significant), or more frequently, in the form of a more innocuous email which accompanies the title commitment. If the closing agent sees no issues, they may say nothing when the commitment is sent. It is those instances when nothing is said that can lead to the greatest anxiety, because there are unfortunately instances where some closing agents may say nothing, but there may be title issues.
Now if you cannot get your closing agent on the phone quickly enough to answer the dreaded question “how is title,” here are some helpful hints to make everyone a little better at reviewing commitments themselves. Since every title commitment is structured exactly the same way and you want a quick (but not necessarily completely accurate) answer to the dreaded title question, you can look at the following provisions of any title commitment for the down and dirty answer:
- Schedule A of the title commitment contains the basic information about the property and the ownership thereof. Review paragraph 4, which identifies the true the owner of the property. If it doesn’t match the seller in your contract, you may have a problem, and a contract amendment may be required to insure that you have a valid contract. Also review paragraph 5, which identifies the true legal description for the property. If it doesn’t match the legal description in your contract, you may have a problem, and again a contract amendment may be required to insure you have a valid contract.
- Schedule B-1 of the title commitment contains all of the requirements that your closing agent must satisfy in order to deliver marketable title to the buyer. This one is a bit trickier, since there will always be several requirements that a closing agent must satisfy in order to make sure the buyer will be receiving marketable title. Most of these requirements are quite normal/common. However, if one of the requirements jumps out as being unusual or particularly difficult to satisfy, that could be evidence of a title issue. Some common examples of challenging/time consuming requirements include the requirement of one or more corrective deeds from prior owners to correct a past title defect, the requirement to probate an estate because someone has passed away, the satisfaction of liens or judgements related to prior owners that were not properly satisfied, or, generally speaking, anything else that requires the closing agent to go to someone other than your seller to resolve the issue.
- Schedule B-2 of the title commitment identifies all of the exceptions to title. In other words, these are the items in the public records that will continue to bind the property post-closing (such as association covenants, plats, easements, and the like) unless something is done to specifically address them. The bad news is that there is very little you can do to identify a title issue in this section. You will need to rely upon your somewhat skilled closing agent to do this work for you. The good news is that generally speaking, it is a little unusual to find exceptions in a title commitment that identify a serious title issue, other than encroachments, which really cannot be identified until a survey review is also performed (and generally speaking many encroachments can be resolved by a variance of some sort anyway).
One of the most significant tasks your closing agent performs is a thorough review of the title commitment. So don’t rush them! However, if you just cannot wait for the answer to the question of “how is title,” hopefully this will give you a little head start. And as always, if you have any questions about title commitments, please contact your trusted real estate attorney.
Berlin Patten Ebling, PLLC
Article Authored by Evan N. Berlin, Esq. firstname.lastname@example.org
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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