8315 W. 10th Street, Indianapolis IN 46234. 
317-214-6023

Interpreting And Reading A Title

August 30, 2024

Have you started your home-buying journey? Did you finally hear the word "title"? What do you think it means and is it important?

Let's find out!

What Is The Title Report About?

"Title" is the legal term of ownership and if you're "on title", that means you're an owner. Therefore before purchasing a home, make sure you understand what you're getting first.

When you own a home, you don't just pay and live in it; it's more complicated than that. There are people other than you who might have the legal right or interest in the real property (legalese for land), and this is where it gets complicated most of the time.

Doing a title review reveals these individuals' identities and their relationship to the land. Therefore, as part of your due diligence as a wise buyer, checking the title before buying the home should be a priority.

Encumbrances On Property

The term "encumbrance" on title refers to a legal claim to property owned by someone other than the owner.

A "lien" is a form of encumbrance. A lien is the owner's (or previous owner's) legal right to force the sale of the property to pay off a debt. One good example of a lien is the mortgage, which you take out to purchase a house. If you do not make loan payments, the lender may foreclose on the lien, which includes selling the property at auction and utilizing the money to pay off the debt.

Fortunately, most sale contracts provide that the seller must settle these liens in full at closing. Thus, the buyer need not be concerned about them. However, there are other encumbrances that the owner should worry about.

Let's Talk About Restrictions, Conditions, And Covenants

In newer communities, covenants, conditions, and restrictions—abbreviated CC&Rs—are typical. They were imposed by developers of new neighborhoods beginning in the 1930s. They were employed, in part, to uphold discriminatory housing regulations. Progressive cities nowadays are confronting this facet of our racial history and making an effort to put it behind us. Furthermore, these limitations have been unlawful and unenforceable since the 1960s.

The uses of the land are restricted under the CC&Rs. In contemporary residential areas, a Homeowners' Association is frequently formed. Do you wish to hang your clothes outside to dry because you care about the environment? Most likely not permitted (since this was essentially illegal in the 1960s and was frequently prohibited under CC&Rs at the time). Considering painting the exterior a more contemporary PNW style? The HOA's Architectural Review Committee needs to give feedback first.

Of all, a neat, uniform, well-kept community benefits owners just as much as it does. However, the limitations shouldn't come as a surprise (nor the expenses; dues to an HOA are due every month or they become liens).

Problems Might Arise From Easements

An easement is permission to utilize another person's land for a certain purpose. One popular kind is an easement for utilities. The utility company now has permission to maintain lines across or beneath your property. They are allowed to enter your property as often as necessary to fix the lines, but after they are done, they have to take care of it. Utility easements are quite prevalent and usually not a problem.

Another kind is an easement for entry and exit. This would include a common driveway and in certain cases, a private road that services several parcels. Now this one might pose an issue.

Driveways that are shared by neighbors are well-known breaking points. For decades, many people have shared a driveway with their neighbors without ever experiencing any issues. However, that's not the case for everyone. Therefore, it pays to know right away.

house miniatures

Examining A Title Report

Ensuring that any liens against the property are settled at closing is a part of the sale procedure. This is accomplished in Washington and many other states using a title insurance firm. 

Upon the parties' agreement, the title insurer receives it. They give a title report that identifies all of the liens on the property's title.   The insurance provider then collaborates with the closing agent to guarantee that, before the buyer becomes the owner, all liens are paid off and removed from the title.  

A copy of the title report will be given to the buyer at the time of issuance. Under a title contingency, a buyer typically has five days to examine and accept the title report. If the buyer objects to any encumbrances, the seller must remove them before closing. If the vendor fails to comply, the transaction falls, and the buyer receives her earnest money back.

Referred to as "Special Exceptions," these encumbrances are those that will bind the buyer and survive closing.

Do not depend on a summary.

To generate the rights and obligations under the law, you must click on the hyperlink of the actual document. Examine that file thoroughly.

If you think it's ok, then good for you! If not, avoid making a mistake by practicing due diligence.

Leave a Reply

Your email address will not be published.

8315 W. 10th Street
Indianapolis IN 46234
317-214-6023

    linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram