When we refer to “title” in a real estate transaction, it refers to the process in which the legalities around a property are examined. Here are just a few things that are examined during the “title review” process:
VERIFY THE SELLER HAS THE RIGHT TO SELL THE PROPERTY
Often there are other entities who may be listed as legal owners. These could include divorced spouses, heirs, or trusts. The actual sellers need to be identified and all other parties cleared from the title before it can change hands.
IDENTIFY LIEN HOLDERS
Sometimes creditors put “liens” on properties to make sure debts are paid before the property can change hands. These can include creditors for property tax, some utilities, contractors, and even the IRS. In some cases, these debts can be paid out of closing dollars, but often they need to be taken care of by the seller before closing.
IDENTIFY EASEMENTS WHICH CAN PROVIDE ONGOING ACCESS
The buyer needs to be informed of any existing easements and ongoing access that goes along with the property. For example, some utilities such as power companies, gas companies, pipelines, driveways, and shared spaces must be identified so the buyer knows exactly what they are purchasing and which areas must remain clear of fences and outbuildings so those who need ongoing access can obtain it.
As a buyer you want to make sure that you are purchasing the right property!