Curing Title Exceptions

Legal Compliance Resource
March 15, 2013 — 2,371 views  

Titles, most often, are subjected to outstanding claims and interests. A search of all the public records that include documents which have been recorded in association with any kind of property is referred to as title exam. The examiner who carries out the test would take a look at the past wills, deeds and the trusts to make sure that the titles have been passed correctly to the new owner and if the prior owners have released the rightful claims from the property.

Title Insurance

Title insurance is referred to as a contract obligation that helps to protect against the losses incurred when the title to a property is not freed or when the policy has any defects. These defects could be liens or encumbrances that were not known when the title policy was issued.

It is quite simple to obtain an insurance title. For somebody who is viewing it, the title may seem to appear much similar to a marketable title. But in reality the difference between both the titles is huge and could turn expensive for the buyer at later stages, if misunderstood. A marketable title in the real estate field would mean that the buyer is getting some kind of deed to the property that can otherwise be insured by an insurance company which is not subjected to any liabilities from the prior owner.

Some Preventative Methods at the Time of Buying Property

  • Make sure to put a clause in the purchase contract which states that the seller has to provide a clear and insurable title at the time of closing. Certain banks that sell REO’s may not fully agree to this which may cause problems while selling the property to the buyer who wants to purchase with conventional financing.
  • Make it a point to see that the title commitment is provided by your closing agent before you pass the actual closing. This document would later become your title policy after the new deed is recorded. Carefully examine the title exceptions and exclusions listed as per the Schedule A and Schedule B, whichever among the two is applicable to the title insurer.
  • Ask your closing agent to carefully review the lien letter obtained from the municipality. If the lien letter hasn’t been received, do not close the same, because the lien letter could specify that the code violations are non-existent.

Can a Defective Title be Cured?

This greatly depends on the severity of the title defect. In most cases the same can be corrected with the assistance of an attorney. Affidavits could also help. In some cases, the court could take serious action if the defective title is not cured. Before any title company issues a policy, the property title will have to be corrected as per the company’s satisfaction.

What is Title Search?

A title search is carried out to find if the seller has any saleable interest in the property that is being sold. It should also determine the kind of restrictions and allowances that applies to the sold property. Title search also includes determining if any liens exist on the property that needs to be paid off at the time of closing.

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