You never know who or what is on title when you are purchasing a home. An encumbered title can slow down and even stop a loan from closing. Always use a title company or real estate attorney to search and examine your property’s title before you purchase. A thorough title search can reveal the real owner, how title is held, legal property description, restrictions, judgments or liens.
There are many different liens and sometimes the seller is unaware of them. There are mechanic’s liens, IRS liens, or owed property taxes. Restrictions may include a shared driveway or fence, a utility easement, or other items that may have remained dormant through one or two previous owners. The last thing you want to have happen is to move in and your neighbor remove what you thought was your retaining wall on your property.
Do not assume that the seller has the right to sell their property. Just because they live in the house does not mean they are on title or don’t have a partner that needs to be involved in the sale. If you are getting involved in a probate sale be aware that the surviving owner may not be free and clear of pending court cases brought on by angry heirs of the deceased. Always have a contingency clause put in your purchase contract so you can look at the title before the sale becoming final. If the title has a ‘Cloud’ or defect, then you should be allowed to back out of the deal and get your earnest money back if the cloud cannot be remedied in a timely manner.
Lenders require title insurance to protect the loan amount and this insurance only covers the lender. You can purchase additional title insurance, but it is usually at a higher rate than the lender’s insurance. For instance in California a home costing $500,000 may cost you about $1600 while the lender’s insurance may only cost $500. Sometimes there are discounts, called a ‘Short Rate’ if the title has been searched within the past two years. As with everything these fees as well as who pays for title insurance is negotiable.
The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area. Award winning Realtors and Re/MAX top producers, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, [email protected] or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale, Arizona.