A title commitment is provided to the Buyer prior to closing to inform all parties connected with the real estate of information related to the title of the property. If a defect or burden on the property is found, the title commitment lists the requirements necessary to be met before a title company can insure a title as marketable.
The most common issues that cause a defective and unmarketable title:
– Incorrect names for the parties
– Outstanding mortgages that will need to be paid off prior to closing
– Judgments, liens or encumbrances on the property that might impact building plans and title
– Tax liens that will also need to be paid off prior to closing
– Typos or mistakes in the public records
– Encumbrances that are paid off, but liens remain unreleased
The Buyer usually only has a small window of time to provide Seller with notice of any title defects or Buyer’s unwillingness to accept title as presented.
Common mistakes a Buyer makes relating to the title commitment when purchasing real estate:
– Not asking for title commitment
– Not allowing enough time to review the title commitment
– Ignoring Schedule B that provides information on the title defects
– Not allowing clear title or an opportunity to waive the defects to be a contingency for closing
– Asking for certain endorsements to title that protect Buyer
Pearl of Wisdom: Never underestimate the importance of the real estate purchase and the necessity of acquiring the property with clear and marketable title when doing so in conjunction with the purchase of a practice or business.