© 2008 Dearborn Real Estate Education CHAPTER 4 HOW TO READ TITLE WORK LIKE A PROFESSIONAL.
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Transcript of © 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
© 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
© 2008 Dearborn Real Estate Education
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.
© 2008 Dearborn Real Estate Education
KEY TERMS
Check off any terms you do NOT recognize
© 2008 Dearborn Real Estate Education
A title commitment is the document that shows all title research done on a propertythrough a particular date.
It is used to prepareclosing documents.
© 2008 Dearborn Real Estate Education
Understanding the layout of a title commitment.
• Cover• Schedule A• Schedule B
© 2008 Dearborn Real Estate Education
Cover sheet or jacket
Standard language pertainingto terms of the policy
© 2008 Dearborn Real Estate Education
Schedule A
Identifies the property; the insured;policy amounts;how Seller holds title;precise legal description.
© 2008 Dearborn Real Estate Education
Schedule B
The “meat” of the titleand key to closing.
Where to concentrate your efforts.
© 2008 Dearborn Real Estate Education
Title Exceptions
found on (virtually) all properties
© 2008 Dearborn Real Estate Education
Real estate taxes
are handled at closing per instructions on the purchase Agreement.
© 2008 Dearborn Real Estate Education
Assessments $$$
levied and pending
Charges for the improvement of property
They are handled per the Purchase Agreement
© 2008 Dearborn Real Estate Education
Easements
authorized uses of land for a specific purpose.
© 2008 Dearborn Real Estate Education
U&D Easements are most common.
Consumers should be aware of their location and size.
Types of easements
© 2008 Dearborn Real Estate Education
Encroachments
Illegal overlap onto another persons property
© 2008 Dearborn Real Estate Education
Blanket easements
cover a large area of land without being specifically located.
?? ??
© 2008 Dearborn Real Estate Education
Common Driveway Easements
occur when two adjacent parcels share access.
© 2008 Dearborn Real Estate Education
Wetlands and EnvironmentalEasements
require the owner NOT to changethe habitat.
© 2008 Dearborn Real Estate Education
Mortgages/Deeds of Trust
hold the property as security for a loan.
© 2008 Dearborn Real Estate Education
Consumers often misunderstand Home Equity Lines of Credit are 2nd Mortgages that need to be paid off and closed out at closing
BewareBeware
© 2008 Dearborn Real Estate Education
Covenants, conditions and restrictions (CC&R’s)
commonly cover an entire subdivision
© 2008 Dearborn Real Estate Education
Covenants, conditions and restrictions (CC&R’s) can contain a
forfeiture provision
© 2008 Dearborn Real Estate Education
Common Interest Communities
occur when owners sharesuch things asaccess, party walls,parking and utilities.
C,C&R’s cover important issues
© 2008 Dearborn Real Estate Education
Covenants, Conditions and Restrictions
Be sure the buyer readsthese before the closing!
© 2008 Dearborn Real Estate Education
UNDERSTANDING AND REMOVING LESS COMMON TITLE ISSUES
© 2008 Dearborn Real Estate Education
Understand the language so you can resolve the problem.
Encumbrance any claim on title.
Lien an encumbrance removable with $$$$.
© 2008 Dearborn Real Estate Education
LIEN$ are classified as $pecific liens or
general lien$
© 2008 Dearborn Real Estate Education
Specific Specific liens attach to liens attach to specific specific real estatereal estate
Mortgage
Mechanic’s Lien
Real Estate Taxes
© 2008 Dearborn Real Estate Education
General liens attach to people..
examples of general liens
State Tax Liens
Child Support Liens
Judgments
State Tax Liens
© 2008 Dearborn Real Estate Education
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
© 2008 Dearborn Real Estate Education
An Attorney’s Lien is filed for
services rendered by an attorney.
© 2008 Dearborn Real Estate Education
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?
© 2008 Dearborn Real Estate Education
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?
© 2008 Dearborn Real Estate Education
Judgment liens
are General Liens obtained by court order
© 2008 Dearborn Real Estate Education
Releasing Liens from Land
• A Satisfaction will completely remove the Lien
• A Partial Release of Lien will lower the amount of the debt
© 2008 Dearborn Real Estate Education
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.
© 2008 Dearborn Real Estate Education
Use of Affidavits
• Affidavits are often used to clear title particularly as Affidavits of Non-identity when someone has a common name
© 2008 Dearborn Real Estate Education
State Tax Liens
enforce government rights for non payment of state taxes
© 2008 Dearborn Real Estate Education
Federal Tax Liens
© 2008 Dearborn Real Estate Education
Child Support Liens
general liens fornon payment of child support.
© 2008 Dearborn Real Estate Education
Federal District Court Judgments
tend to be large nationallawsuits with large awards
© 2008 Dearborn Real Estate Education
RED FLAG AREAS FOR CLOSING
© 2008 Dearborn Real Estate Education
A way to temporarily suspend and possibly prevent debt collection for those debts listed at the time of the bankruptcy petition.
Bankruptcy
© 2008 Dearborn Real Estate Education
Cloud on Title
a generic name for any item that might make title unmarketable.
© 2008 Dearborn Real Estate Education
Your Seller claims property as his Principle Residence and says it is therefore exempt from foreclosure of a large judgment. What do you do?
© 2008 Dearborn Real Estate Education
Eminent domain
The government’s taking of land for the public good and with just compensation.
© 2008 Dearborn Real Estate Education
Judgments in favor of U.S.
Liens in favor of the U.S.Government or any U.S. Agency are good for 20 years.
© 2008 Dearborn Real Estate Education
Pollution Control Liens
liens by any government agency for land clean-up
© 2008 Dearborn Real Estate Education
Decrees of Dissolution (Divorces)create special title issues:
Watch for:transfer of title to one partyliens in favor of ex- spousename changesspecial stipulations
© 2008 Dearborn Real Estate Education
Notice of Lis Pendens
any legal document stating a law suit has been commenced on the property.
© 2008 Dearborn Real Estate Education
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!
© 2008 Dearborn Real Estate Education
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