Title Defects and Cure Period

The title commitment in a real estate transaction will serve as part of the blueprint for the transaction. It gives your closing agent a checklist to complete in order to issue your title insurance policy and to ensure that everything is in order for your sale or purchase. Generally, the closing agent will see standard requirements on the title commitment, such as the requirement to prepare a warranty deed to convey the property or a requirement to ensure that property taxes have been paid. However, every once in a while the title commitment will disclose an issue that needs to be resolved by the Seller in order for the Seller to convey marketable title.

Both the Standard Residential Contract and the “AS-IS” Contract give the Buyer 5 days from the receipt of a title commitment to examine it and make written objections to the Seller. This holds true regardless of whether the Buyer or the Seller is obtaining the title commitment. It is imperative that a Buyer have their title commitment reviewed by a licensed professional in order to ensure that everything is in order within the 5 day review period. After the review window has passed, the Buyer is deemed to have accepted all conditions in the title commitment.

The contract also gives the Seller 30 days from the day that they receive notice of an objection to cure the defect. The 30 day “cure period” begins when the Seller receives notice and gives the Seller time to take the necessary steps to resolve the issue. If a Seller is unable to cure the defect in 30 days, then the Buyer can take one of the following steps, at the Buyer’s discretion:
(a)    Extend the cure period, however it cannot be extended for more than 120 days;
(b)    Take title with the defect; or

(c)    Terminate the contract and receive their deposit back.

It is important to keep in mind that the 30 day cure period is a fixed period, and if the 30 day window extends beyond the closing date the closing date is automatically extended. This could impact both the Buyer and Seller if they have sale contingencies or financing involved. If you have any questions about title commitments or title defects, consult with your local real estate attorney.

Sincerely,

Berlin Patten Ebling, PLLC

Article Authored by Natasha Selvaraj, Esq.  nselvaraj@berlinpatten.com

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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