TITLE REPORTS CONFOUND CLIENTS AND AGENTS ALIKE
REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS, TIPS FOR SENIORS
September 4th, 2008
Preliminary Title Reports are prepared and provided to all parties to a real estate transaction after an escrow is opened. All too many buyers, sellers, agents and lenders stuff it in a file and never give it a second look. Some believe the title company will call or alert the parties if a title cloud is uncovered. In the real world, the defect is buried in the report and it is up to someone else to review, discover and question the items summarized in the title report.
If there is one thing I’ve learned about the title insurance industry, they usually only end up paying a claim if they goofed up the preliminary title report. Getting them to make it right can be a long frustrating process for the average property owner. Title reports are complex legal documents that take experience and knowledge to understand. They are the basis for an offer of title insurance.
Title reports are broken into sections:
- Schedule A- A description of the property and amount of insurance purchased. The legal description is usually attached as “Exhibit A” for reference. Any easements that benefit the property are also described in this section. Be sure to have someone knowledgeable in easement matters review these carefully with you until you have a full understanding of the type of easement you are being granted. The amount of insurance is usually equal to the purchase price.
- Schedule B- Parts I & II list items the policy does not insure against loss or damage. These exceptions always begin with property taxes that are not yet due, which take priority over any subsequent items in this section of the title report. Other common exceptions are easements that burden the property for roads and utilities, Covenants, Conditions, & Restriction’s, special assessments, mineral rights reservations and many other items including unrecorded documents. There are also several pages of boiler-plate exclusions from coverage that limit the title companies liability for many items that can end up being problematic for the purchaser.
The complexity of title reports require detailed knowledge of real estate law beyond that required of real estate professionals. My advice is to review the report with your real estate professional then visit the title company and speak to a title department representative or the officer that prepared the report, if at all possible. If you still have questions or concerns, contact a qualified real estate attorney to review the title report and assist in negotiating changes with the seller and/or title company.
The title company may alter their policy based on further research of the public records or a request from one of the parties. Endorsements may be available for protection against certain risks. Bonds can also be purchased in some instances to indemnify the title company against certain title clouds.
An experienced agent can alert you to potential problems that may need further investigation. The buyer should also take the initiative and ask many questions of the title company including requesting copies of the documents that relate to items that appear on a title report. In many cases, they contain additional details and occasionally other very significant restrictions that could tarnish the desirability of a particular property.
If you need my expertise for your purchase or sale of real property, contact me:
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
