A few weeks ago, I used this forum to write about the importance of purchase agreements in every real estate transaction. This time I want to address title insurance.
With each real estate deal, sellers need to make sure they own what they’re selling, and buyers need to make sure they’re getting what they’re paying for. We call this “marketable title.” Whether or not a seller owns marketable title is determined based upon a search by a title insurance company at the county register of deeds office. The title insurance company will then issue its commitment to insure title, with the commitment setting forth the condition of title, including any encumbrances against title. The commitment will be followed up after closing with an owner’s policy of title insurance, paid for by seller.
The purchase agreement should specify a deadline for seller to order the commitment and a time limit in which buyer can have a knowledgeable real estate attorney review it, and either accept the condition of title or state objections. Once objections are identified, the seller can resolve the objections, or the parties may agree to cancel the transaction.
The importance of a buyer receiving the commitment well in advance of the closing is often overlooked and sometimes ignored altogether. I was recently asked to review closing documents on the eve of closing, only to find out that the title commitment was never provided to my buyer-client; they didn’t even know what it was, much less its importance.
We’re happy to help with your real estate transactions. The sooner we become involved, the better. Call us at (248) 477-6300.