Make a List, and Check it Twice: Steps to Identify Title Issues

Doing Your Due Diligence

In today’s booming real estate market, the temptation is to rush through the contract, get to closing quickly, and move on to the next sale. However, cutting corners in getting a listing and a property under contract can result in a ripple effect that costs you and your client time and money. Never minimize the importance of due diligence in your role as an advisor to homebuyers. Go through each step to ensure a smooth closing, or if there is an issue, you catch it as early as possible so you can advise the potential purchaser about the problem with the property.

Here are a few tips and things to look for when getting a property under contract and preparing for closing:

Don’t Just Look at the Property Appraiser’s Website or the Tax Collector’s Website for Ownership or Legal Descriptions

Looking at these websites will often accurately reflect who owns the property and the legal description, but relying on this information could lead to disastrous results. For example, the property appraiser may have one folio number and parcel identification number for multiple pieces of property that have separate deeds. You may also see an owner as “The Estate of…” when that merely lets you know that the previous owner is deceased, not that an estate was opened. You don’t want to get to closing only to find that the property you contracted for only had a partial legal description or that the Seller never had the legal authority to enter the contract in the first place.

Don’t Use an Old Survey

A prior survey may be available, but a current survey could provide more accurate information than an old survey with modern advances in technology. In addition, you want to make sure that any existing monuments, easements, fences, and structures are all up-to-date and that no zoning changes have occurred since that survey. The newer survey can also compare the legal description you have against the boundary lines and easements reflected in the survey.

Review HOA Declarations and the Estoppel Letter

If the property is part of a homeowners association or a condominium, review the association’s declarations, rules, governing documents, and the estoppel letter to ensure you know what fees and assessments are owed or are an ongoing obligation to the purchaser. Post-closing issues can arise when a new owner receives a significant evaluation owed to the association referenced in the estoppel letter but not considered before closing.

Get a Home Inspection and Review it Alongside the Seller’s Disclosure

Sellers must disclose any significant property defects that may not be readily visible to purchasers. If there are items listed in the Seller’s disclosure, your home inspection should look at those items and make sure that any repairs are complete, permitted, and do not materially affect the home’s value. Another post-closing issue can arise between the purchaser and the Seller and even with the home inspection company.

 

These are just a few examples of potential pitfalls and things to look for when getting a home under contract. The take-away of all of this? Always take your time and be thorough when navigating from listing to closing. If you do so, you are potentially avoiding a delayed closing, a canceled closing, or worse, litigation. Should any of these issues arise, or if you have any questions about a deed, title search, survey, and so on, always contact a qualified real estate attorney for a consultation.

 

Sincerely,

Mark Mann, Esq. mcmann@berlinpatten.com

Mark is a veteran trial attorney with an AV PreeminentTM  rating from Martindale-Hubbell Peer Review Ratings and has focused his practice on representing individuals in civil litigation including personal injury/wrongful death cases, real estate disputes, contract disputes, contested probate matters, and family law cases.

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