What Due Diligence Will My Real Estate Attorney Perform During My Transaction?
It is up to the buyer to decide how involved they want me to be in their transaction. I might review a contract before they sign it, clarify information on the disclosure forms, and address their various concerns concerning title to the property or the loan documents. Most commonly, I deal with issues involving the title to the property. The title company issues what’s called a preliminary commitment for title insurance, which essentially means that they’re prepared to issue a title policy at closing subject to the title being put into the name of the buyer. The title will contain the same items set forth in the commitment unless there are items that are going to be removed at closing. For example, if the seller has an outstanding loan on the house and the lien supporting that loan is on the title, then the escrow will make sure that the loan is paid in full and that the necessary documents are obtained to remove that lien from title.
The paperwork that releases the lien off the title may not come back to escrow for a week to 30 days after the closing. So, the seller and the buyer rely on an escrow company to complete this step after closing. The escrow company commits in writing to the title company that it will in fact take care of that process, even though it may not happen until 30 days after the actual closing. This means that there will be a period of time when the lien is still on the house and the buyer doesn’t realize it. The buyer’s lender will be in second position behind that lien until it’s actually removed. Under such circumstances, escrow is absolutely necessary because they need to commit to all the parties that they are going to obtain the necessary release documents after closing. If the parties do not have a reputable escrow company or the escrow company does not have enough financial strength to do this, then there will be no recourse and the property will still be subject to the lien of the seller’s loan.
How Do You Discover Whether Or Not I Am Getting A Good Title?
The preliminary commitment lists who is currently vested in title, so the buyer can verify that the name of the owner matches the name on the purchase contract. If they don’t match, then that is cause for real concern and there will be a question of who in fact should be on the contract. The title commitment will also show which liens are currently on title. The buyer will not proceed with the purchase unless the seller removes those liens at closing. This will be accomplished by the escrow agent paying the liens from the seller’s proceeds and obtaining the release documents from the lien holder. The title commitment is an extremely important element of the transaction and provides direction to the parties regarding the closing of the purchase and sale.
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