Real Estate Title Basics: Things To Look For In Your Title

Dog Checking Real Estate Title On Computer

The real estate title to your home is an essential legal document. It has specific information about your property or the property you are buying. It documents who the legal owner is and what their ownership rights are. The real estate title also contains a legal description and details anything recorded against the home, such as liens, easements, and encroachments. If the property is subject to any rules and restrictions from either a homeowner’s association or the local community, these will also be listed on the title.

Important Things To Look For In Your Real Estate Title

You will be able to look over a preliminary title report on the property you are buying. Here are seven things to look for:

1. The legal description- will accurately and specifically identify the property’s boundaries to the degree acceptable by the courts in the state where the property is located. If the property is a condominium or planned community, the description will include details on easements, parking, storage, and the property’s interest in common areas.

2. Taxes- Property taxes are superior liens and always show up on a title report since property cannot be transferred if taxes are due. The report will indicate whether taxes are due or paid in full.

3. Mortgage liens- Anyone who is owed money by the homeowner can file a lien on a home, and those liens will be listed in a title report. Any legal claims will be listed in descending order, starting with the largest lien holder.

4. Easement-or right-of-way, gives the holder the right to use portions of the legal owner’s real property in a defined way. For example, a neighbor may have an easement allowing them to cross through part of your property to access their driveway, or a utility company may have the right to cross your property to install and maintain telephone lines. If an easement shows up in a title report you are looking at, ask the title company for all the documents relating to the original easement and how it was created.

5. Encroachment- is the unauthorized, physical intrusion of one owner’s real property into that of another. a tree limb hanging over on a neighbor’s property or a fence built beyond the property line are examples of encroachments. Encroachments are not always listed on the title report. In some cases, a survey may be needed to show the existence of an encroachment. If the encroachment takes place over many years without the encroached owner taking any action, then the encroachment may become an easement by prescription.

6. CC&Rs. – Covenants, Conditions, and Restrictions, are recorded against a property with rules and regulations. These apply to condominiums and other planned unit developments. It is a good idea to know what’s in the CC&Rs before you commit to a purchase.

7. Historic Oversights & Requirements- Properties located within historic or protected districts are subject to rules and restrictions regarding the homes’ alterations and maintenance. Rules are set and regulated by a local historical oversight committee and will show up on a title report. These rules and regulations should be carefully reviewed. They can limit what you can do to your home and require you to maintain the home in a specific way, which may be a financial burden.

Although most home purchases are completed without problems, and the title is transferred clean and clear, sometimes issues can arise. Knowing what to look for in a title report will alert you to any problems that may affect your homeownership. If there are issues, they can likely be resolved quickly and before you close.

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