Title Issues

When you are purchasing your home, it is important to know that there won't be any questions about your ownership of the property once the purchase is complete. Historically, attorneys were often hired to research the history of the property to confirm that there were no questions in this regard. The title company issues a title policy insuring that the new owner has good title to -- or ownership of -- the property. A standard purchase contract generally establishes an agreement that the seller will provide the buyer with a commitment for title insurance by a specific date. It also provides a period for the buyer to review the commitment and object to unacceptable title conditions. We typically allow a week to 10 days for the commitment and 3-5 days for the review.

While title insurance policies are designed to cover you if there is outright fraud in the sale of the property -- if it was the husband's girlfriend rather than his wife that signed the closing documents for example -- these kinds of problems are not common. Typically, our review of the title commitment focuses on four issues:

Rights of Others to Use the Property: Almost without exception, others will have "easements" which give them the right to use portions of your property for specific purposes. In nearly all residential subdivisions, there are easements that allow utility companies to install and maintain utility lines on certain portions of your property. Easements can also give someone the right to drive across your property, fly over your property, mine your property, or bury their spouse on your property.
Liens Against the Property: A lien is a record of a right to collect money when the St Petersburg Florida property is sold. Lenders file liens to record loans on a property. Governmental entities file liens to record taxes owed by the owner of the property. Contractors and vendors file liens to record money owed for work they have completed or products they have installed on a property.
Obligations of Ownership: Financial and other obligations can be recorded in similar ways. In the mountains, for example, covenants, deeds, or other agreements can create obligations to contribute to the building or maintenance of roads.
Limitations on Use: As I've noted elsewhere, your right to use your St Petersburg Florida property can be limited by local regulations and state laws. But there can also be use restrictions that are connected with a specific property or set of properties. Subdivision covenants can limit the way you use the property, as can limitations placed in earlier deeds by a previous seller or agreements between local government and a developer.

In the title commitment, the title company will reference recorded documents that can create these kinds rights and obligations. In some cases, references to problematic issues will be obvious -- a reference to a $30,000 tax lien for example. In others, the commitment may simply refer to the subdivision covenants. If you don't read the associated document carefully, you may not learn about your responsibility to provide easements, to pay for road construction or maintenance, or to get permission from your neighbors to change the color of your house. You need expert assistance -- either a good real estate agent or a good attorney -- to assist in the review of the title commitment.

If serious problems are reflected in the title commitment, a standard contract gives the buyer the right to object to these problems and to let the contract terminate if the seller cannot address them to the buyer's satisfaction before closing. If there are subdivision covenants that the buyer is uncomfortable with, the seller will generally not be able to do much about that. In other situations, however, there may be things that the seller can do to address a problem. They may be able to purchase additional insurance coverage through the title company that will make the buyer comfortable. They may even be able to convince neighbors to give up easements that the buyer is worried about.

While surveys are not produced by the title company, the information reflected in the survey overlaps substantially with the information in the title commitment. For example, easements described in the title commitment -- at least the most common easements that provide a right to use a limited portion of the property -- should be reflected on the survey. Similarly, if the survey shows that fences or decks extended beyond the property lines, the title company will list this "encroachment" as an exception in Schedule B-2. This means that they will not cover you if you suffer damages as the owner because these structures extend onto your neighbors property.

The title company should also provide the buyer with a copy of the tax certificate indicating the tax levy on the property, the taxing districts to which taxes are due, and a statement indicating if there are any unpaid taxes or assessments on the property. A standard contract gives the buyer the right to review tax levies within "special taxing districts" and to terminate the contract if they are unsatisfied. To exercise this right, however, you need to obtain the information and object by the title objection deadline. It should also be noted that the clause as written is somewhat ambiguous, given that there is no clear definition of what a "special taxing district" is.