Dear Dave,
We are in the process of selling our home and will be purchasing a new one. Right after we listed our property for sale, we received title work from our agent on our home. Can you explain what exactly title work is? We were told that we need to review it, but what should we be looking for on the property we are selling? When we purchase, what should we look for on the title work for the new property – anything different we should look for or the same stuff? Thank you for your help.
Dennis, Grand Junction
Dennis,
This really is a great question and a part of the buy/sell process that is far too often glossed over. It is glossed over, because most of the time people and agents do not know how to answer your question thoroughly and with command of the specifics of what you are looking for. I am very lucky to work closely with Bob Reece, President of Advanced Title, who is one of the very best real estate experts I know and knows title work inside and out! I have relayed you question to Bob, to ensure you get the best possible explanation!
"Title work" is really the title commitment and the documents that are referenced in the title commitment such as protective covenants. The commitment outlines the current status of title interests in the property such as the name of the owner(s), any lender and other interests such as easements holders, and the commitment gives sellers and buyers the opportunity to review the title to the property before the closing occurs. The seller should compare the deed with which they acquired ownership to the property with their name(s) as it appears on the title commitment to make sure it is the same. A similar comparison for the legal description is essential. The third area of the commitment are the Exceptions to Coverage that lists various protective covenants, easements, agreements, reservations, etc. that affect the property. These items should compare favorably to the exceptions that appeared in the title policy that was issued when the seller originally acquired the property. And, by example, any easements granted by the seller should also appear as an Exception to Coverage on the title commitment. Any discrepancies found by the seller should be disclosed to his real estate agent as soon as possible and prior to closing so a buyer becomes fully aware of the matters that affect the property being purchased.
A buyer would be wise to review a title commitment in similar fashion; to make sure their names properly appear on the title commitment as found under the real estate contract and on any lender application; that the legal description matches the one found on the seller's acquisition deed; and to review the documents referenced as Exceptions to Coverage to make sure they understand any obligations, restrictions to usage or third-party rights that affect the property about to be purchased.
As Bob intimates, your title review is a very important part of the process, as it lays out virtually everything you need to know about your property and the property you are going to purchase. Your rights and the rights of others should be spelled out in your title work and thus leave few things, hopefully, to chance. It is always sound advice to ask questions about ANYTHING you do not understand.
I hope this helps and remember if there are any discrepancies make sure to bring them to the attention of your agent or the title company that has provided the title information so they can be addressed and remedied if need be. Best of luck selling and buying!
Dave Kimbrough
The Kimbrough Team
