© 2008 Dearborn Real Estate Education CHAPTER 4 HOW TO READ TITLE WORK LIKE A PROFESSIONAL.

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© 2008 Dearborn Real Estate Education CHAPTER 4 HOW TO READ TITLE WORK LIKE A PROFESSIONAL

Transcript of © 2008 Dearborn Real Estate Education CHAPTER 4 HOW TO READ TITLE WORK LIKE A PROFESSIONAL.

Page 1: © 2008 Dearborn Real Estate Education CHAPTER 4 HOW TO READ TITLE WORK LIKE A PROFESSIONAL.

© 2008 Dearborn Real Estate Education

CHAPTER 4

HOW TO READ TITLE WORK LIKE A PROFESSIONAL

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© 2008 Dearborn Real Estate Education

LEARNING OBJECTIVES

• define the most common title encumbrances and explain in plain English what they mean

• distinguish what’s acceptable on title work from what’s not acceptable

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LEARNING OBJECTIVES

• know how to review title work to assure it meets a customer’s needs

• recognize red flag areas that will likely delay closing unless given special attention.

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KEY TERMS

Check off any terms you do NOT recognize

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A title commitment is the document that shows all title research done on a propertythrough a particular date.

It is used to prepareclosing documents.

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Understanding the layout of a title commitment.

• Cover• Schedule A• Schedule B

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Cover sheet or jacket

Standard language pertainingto terms of the policy

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Schedule A

Identifies the property; the insured;policy amounts;how Seller holds title;precise legal description.

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Schedule B

The “meat” of the titleand key to closing.

Where to concentrate your efforts.

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Title Exceptions

found on (virtually) all properties

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Real estate taxes

are handled at closing per instructions on the purchase Agreement.

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Assessments $$$

levied and pending

Charges for the improvement of property

They are handled per the Purchase Agreement

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Easements

authorized uses of land for a specific purpose.

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U&D Easements are most common.

Consumers should be aware of their location and size.

Types of easements

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Encroachments

Illegal overlap onto another persons property

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Blanket easements

cover a large area of land without being specifically located.

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Common Driveway Easements

occur when two adjacent parcels share access.

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Wetlands and EnvironmentalEasements

require the owner NOT to changethe habitat.

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Mortgages/Deeds of Trust

hold the property as security for a loan.

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Consumers often misunderstand Home Equity Lines of Credit are 2nd Mortgages that need to be paid off and closed out at closing

BewareBeware

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Covenants, conditions and restrictions (CC&R’s)

commonly cover an entire subdivision

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Covenants, conditions and restrictions (CC&R’s) can contain a

forfeiture provision

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Common Interest Communities

occur when owners sharesuch things asaccess, party walls,parking and utilities.

C,C&R’s cover important issues

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Covenants, Conditions and Restrictions

Be sure the buyer readsthese before the closing!

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UNDERSTANDING AND REMOVING LESS COMMON TITLE ISSUES

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Understand the language so you can resolve the problem.

Encumbrance any claim on title.

Lien an encumbrance removable with $$$$.

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LIEN$ are classified as $pecific liens or

general lien$

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Specific Specific liens attach to liens attach to specific specific real estatereal estate

Mortgage

Mechanic’s Lien

Real Estate Taxes

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General liens attach to people..

examples of general liens

State Tax Liens

Child Support Liens

Judgments

State Tax Liens

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and generally to all the people and generally to all the people own ...including real estate.own ...including real estate.

General Lien$ General Lien$

ex: STL,FTL, JUex: STL,FTL, JU

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An Attorney’s Lien is filed for

services rendered by an attorney.

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Financing Statement a lien filed on personal property

If selling a mansion, what personal property might be

included? Might there be a financing

statement on that property?

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Mechanic’s liens

occur when material or labor are supplied to build, renovate or repair property.

How often do people make

repairs to their property before

selling?

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Judgment liens

are General Liens obtained by court order

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Releasing Liens from Land

• A Satisfaction will completely remove the Lien

• A Partial Release of Lien will lower the amount of the debt

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Releasing Liens From Land

A Partial Release of Land releases a parcel, but leaves the unpaid balance of the lien intact to attach to other property.

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Use of Affidavits

• Affidavits are often used to clear title particularly as Affidavits of Non-identity when someone has a common name

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State Tax Liens

enforce government rights for non payment of state taxes

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Federal Tax Liens

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Child Support Liens

general liens fornon payment of child support.

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Federal District Court Judgments

tend to be large nationallawsuits with large awards

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RED FLAG AREAS FOR CLOSING

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A way to temporarily suspend and possibly prevent debt collection for those debts listed at the time of the bankruptcy petition.

Bankruptcy

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Cloud on Title

a generic name for any item that might make title unmarketable.

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Your Seller claims property as his Principle Residence and says it is therefore exempt from foreclosure of a large judgment. What do you do?

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Eminent domain

The government’s taking of land for the public good and with just compensation.

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Judgments in favor of U.S.

Liens in favor of the U.S.Government or any U.S. Agency are good for 20 years.

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Pollution Control Liens

liens by any government agency for land clean-up

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Decrees of Dissolution (Divorces)create special title issues:

Watch for:transfer of title to one partyliens in favor of ex- spousename changesspecial stipulations

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Notice of Lis Pendens

any legal document stating a law suit has been commenced on the property.

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Impact Fees

• Used by Local Government on new developments to finance roads, sewers, water and other needed infrastructure.

• Can be paid by Builder/ Developer or Buyer as negotiated in Purchase agreement.

• Fees can be significant!

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REVIEW QUESTIONS