Before we find out the 5 reasons why you should invest in Title Examination, first, let’s know what is it?
What is Title Examination?
When acquiring real estate, a title examination is among the crucial components of the process and can be critical to the acquisition’s success.
Generally, title examinations ensure that the property to be purchased is appropriate for sale from every possible angle. The procedure looks for restrictions and limitations on the property that may prevent it from being sold or may have an influence on the process.
Property legal entanglements might include outstanding tax liens or limitations put on the property in recent years. The title examination procedure also looks into the property’s record of ownership and the documents that have been linked with it.
It will also examine wills and trusts that may have an influence on the estate and its possession. The title investigation examines the chain of title to see if the estate’s ownership can be traced back to anybody other than the seller and buyer involved in the current transaction.
There are several processes involved in completing a successful property deal. As the process might be fascinating, it is also vital to remember that it can be crucially important and complicated. As a result, you should be familiar with all the procedures and benefits.
5 Reasons Why You Should Invest in Title Examination
1. To Avoid Issues Caused by Defective Title
It is essential to get your title examined by an experienced title attorney in order to prevent the severe complications that might arise from a defective title.
It is also known as a cloudy title since it makes it difficult to determine who is the legal owner of that land because of the defect in the title. It has the potential to cause misunderstanding and result in the title being considered invalid. Failure to identify the flaws that may result in defective title prior to the sale of the property may have significant repercussions for the buyer, including the potential for legal loss of the property.
That is why a title investigation must be performed before closing the transaction. If any faults are discovered, they may be corrected before the transaction is completed. Alternatively, if they are unable to be met, any party may withdraw from the transaction.
2. Prevention From a Forgery
Forgery is the act of creating or changing a legal document fraudulently and falsely. It is a crime that has a mandatory minimum sentence of one year in state prison. Additionally, it is an act that may cloud title to the property and result in lengthy legal processes.
Forgery is becoming more prevalent, and the victims are unsuspecting property owners. According to title industry statistics, forgery losses have risen in the previous decade, accounting for more than 20% of all losses paid by title insurers.
These data imply that the customer now has the highest possibility of being a victim of counterfeit in history. Forgeries of real property may be perpetrated in a variety of ways:
- It may be forged by any person, commonly a member of the family or friend, in an effort to transfer legal possession of the property without the genuine owner’s knowledge.
- A lender’s documented security agreement may be voided by a forged paper falsely representing payment of the existing loans, allowing for the illegal acquisition of another loan.
- By forging the note and deed of trust, a person might leave an unwary homeowner to find out the truth about a cloud on their title when the buyer of the note begins foreclosure procedures for nonpayment.
- An impostor or a legal notary may notarize a fake document if they cannot verify that the signer is who they claim they are.
3. Details About Your Rights Over the Property
The results of an assessment of the title will also reveal what kinds of rights your client will have in relation to their new home. These include the right to hold the property exclusively, the right to access it, and the right to divide or change the property. It is possible for the buyer to be barred from making full use of their property if any of these rights are discovered to be absent, faulty, or confusing.
Suppose there is an easement that lets other people cross the property, but the buyer didn’t know about it when they bought the house. They might be surprised later on when they find out about it.
4. Marital Status Property Issues
Conveyances involving divorce property split, out-of-state grantors, or business transactions often violate title rules. In such cases, simple divorce order or affidavit may suffice. How you respond to these difficulties may be determined by the transaction’s circumstances, such as the availability of title insurance, the cost of addressing the issue, the level of risk, and how quickly the issue may be resolved.
The facts and circumstances should be carefully explained in writing before waiving a condition regarding the absence of spousal joinder or omission of marital status.
5. Issues With Bankruptcy
There are those of us who would want to avoid bankruptcy court at all costs. But bankruptcy procedures may have an enormous influence on title examination, so that may not be a feasible aim.
The following are the most common categories for these issues:
- Unexpected possessions.
- Abandonment and automatic stay concerns
- The impact of discharge on judgment liens.
- The selling or refinancing of a piece of real estate.
A title examiner must establish requirements to assure marketability of the title regardless of whether the omission is due to honest oversight, purposeful concealment, laziness, or some misunderstanding of the nature of the debtor’s interest (e.g., a contract for deed transaction).
Changing the schedules while the case is underway or otherwise open to include the property is possible. The bankruptcy trustee’s interest in the property may need additional requirements to be fulfilled, or any objections to a claimed exemption may need to be eliminated.
This is particularly true if the withheld property is not plainly the debtor’s homestead. Bankruptcy trustees may administer the non-exempt real estate if it isn’t heavily burdened with debt. Inheritance, interests in a contract for deed, and joint tenancy property are all examples of this.