Hudkins January 9th, 2018
A Title Report – What’s That?
When Hudkins Law is engaged by a Buyer of real estate, one of the most important aspects of our representation is to complete “Title Due Diligence”. Hudkins Law employs a team of in-house title attorneys that examine Registry and Court records. Within a few days, our title attorney team produces a title report (otherwise known as an abstract of title). The title report describes the property being conveyed, the history of ownership, identifies any liens or other encumbrances, and also reveals any easements, restrictions or covenants that may impact the property. An evaluation of the title allows our title attorneys to determine whether the title is insurable and marketable and provides the buyer an opportunity to decide if they feel comfortable moving forward with the transaction.
What Are the Elements of a Title Report?
A title report identifies the following:
- Confirmation of ownership
- Easements burdening or benefitting the property, covenants, or restrictions which may impact property use and marketability
- Rights of first refusal
- Legal description, including lot/block/square numbers, plat references and recorded plans
- Outstanding mortgage lienholder interests
- Outstanding judgment lienholder interests
- Outstanding governmental or municipal tax lien interests
- Pending court actions having the potential to impact property interests
What is the Difference Between Insurable and Marketable Title?
“Insurable Title” refers to a title that a nationally recognized title insurance carrier will insure with limited or no exceptions on the policy. This means the title insurance carrier will issue both an Owner’s Title Insurance Policy and also a Lender’s Title Insurance Policy. “Marketable Title” refers to a title that a reasonable, prudent buyer would purchase. For example, if an insurance premium were high enough, a title insurance company may be willing to risk insuring a property that has a title defect but a reasonable, prudent buyer may not feel comfortable with the same risk because selling the property could a be challenge and curing the defect could be expensive and time consuming.
Why Should I Engage An Attorney to Examine Title?
When a Purchase and Sale Agreement is executed, most buyers focus on their home inspection and aligning financing. While these items are of great importance, it is important to simultaneously examine the title during the inspection and “Title Due Diligence” phase of the contract. A property listing may disclose some of the easements, covenants, and restrictions that are recited in the current deed conveyed to the seller, but a thorough title examination will reveal any details of title that were memorialized or recorded before the current deed. Not all matters of title are recited in the deed that a prospective buyer may view in a “listing package” presented by the seller or real estate listing agent.
What Other Items Do Title Reports Identify?
Title examinations identify undischarged mortgage liens which can result in uninsurable title until the property owner obtains a discharge from the former mortgage lienholder. Even if a mortgage had been satisfied years ago, a recorded discharge is required to clear the title. It often takes considerable time to request a mortgage discharge for a loan that had been previously satisfied and this process can cause a delay closing. Other matters, such as unreleased judgments against prior owners, and rights of first refusal, sometimes come as a surprise to the current owner and may cause delays in closing.
A title report also accurately determines who (or what entity) is vested with title; which is oftentimes not accurately reported in the tax records. Local property tax records are not valid for identifying or proving ownership of real estate.
Some sellers of real estate are proactive about examining their titles prior to listing their properties for sale. By obtaining a title report in advance of closing or at the time of listing the property, a seller and his/her agent can avoid closing delays by having the early opportunity to cure title if necessary. This is especially important if the seller did not examine their own title when they acquired the property (this is common when parties inherit properties).
About Hudkins Law
Hudkins Law was founded in 2006 by Jacqueline M. Hudkins. The firm provides title and settlement services for residential and commercial real estate transactions. Each real estate transaction is managed by a team of Attorneys and Paralegals to guarantee continuous coverage throughout the entire closing process and combines the expertise of Real Estate, Title, Trust, Estate Planning and Corporate Attorneys to offer competitive flat fee pricing. The firm employs ten Attorneys and ten paralegals and maintains offices in Concord NH, Windham NH, New London NH, Keene, NH, Norwich VT, & Andover, MA.