How do you know if a property you are buying, selling, or listing has title issues?
In part 1 of this series we revealed the title clouds that are still affecting many homes, commercial properties, and communities in the Sunshine State. Now, let’s take a look at how to know if a property you are working with might have those challenges…
Why You’ve Got To Know
If you are buying, and maybe even renting a property you want to know you are going to be able to stay. If you are buying, you don’t want to find out your investment is lost due to a previous owner still having the rights to occupy, mortgage and sell the property, or find out a lien far exceeding the value could bankrupt you, put you in foreclosure, and prevent you from selling.
As a seller, you don’t want to get down to the day of closing and find out you can’t actually sell. You could be in some serious legal and financial hot water, not to mention derailing your moving plans.
As a Florida real estate agent you don’t want to be investing heavily in marketing properties which you can’t actually sell, or be arranging deals that wreck your reputation.
You’ve got to know there is clear title, or at least know the real deal so that you can present it properly.
Identifying Title Issues
There are some properties which are more likely to have title problems than others. Bank owned properties, former foreclosures, auction properties, and distressed homes have a high risk of being infected. However, with high levels of distress and fraud in recent years, almost any property can have issues. So, how do you know?
Having a title searched performed, and checking the chain of title is the only reliable way to know. You can get some information from public records, and the local county property appraiser’s website. Yet, it is really necessary to have a professional title company dig in, and do a thorough search. They know what to look for, how to solve issues, and can tell you what they will insure against, and not. Everyone should be getting title work done before closing anyway, and lenders will require it.
Who Should Order Title
Traditionally the buyer’s lender will order title searches and insurance. This is at the direction of the contract, and charged to either the buyer or seller. This is negotiable, but is usually based on the tradition of the county.
Unfortunately, this has often been done late in the transaction, after the contract is done, and the mortgage loan application is approved. At that point everyone’s hopes are high, a lot of time and money has been invested, and the fall out of a flawed title can be extremely costly and disrupting.
Savvy real estate brokers, sellers, and buyers are now heading off these issues in advance by ordering title reports before a property is listed for sale.
In Part 3 we’ll tackle how to buy, sell, and broker property safely and profitably, with confidence, and even make deals work where there have been title challenges…