Should My Lawyer Review the Title Work for a Home Purchase?

Yes – It is highly advisable to have a lawyer review your title work, because a lawyer can review the title insurance commitment from the title company and negotiate with the company to ensure that the policy sufficiently protects your interests.

Title work first begins with a “Title Search” to determine who has title (or ownership) of the property. Typically a title company examines all of the deeds, public records and other documents that pertain to the particular property. The title company is trying to locate any potential defects in the chain of title that would raise a question as to who actually owns the property.

Defects might include: 1) a significant variation in the legal description of the land on a prior deed; 2) a deed that was improperly executed; or, 3) a deed that was executed by someone who lacked capacity to convey the property. The title search may also determine if any liens exist on the title and if the owners are subject to any judgments in the county where the real estate is located.

Once the title search is complete, a title insurer (usually a national insurance company and not necessarily the local title company you are familiar with) will issue the Title Insurance Policy. Title insurance is an insurance contract that protects the policyholder from losses caused by both on-record and off-record defects in existence on a specific date. There are two types of policies: 1) The Owner’s Title Insurance Policy, which protects the owner from losses due to title defects; and 2); The Lender’s Title Insurance Policy, which insures that the lender’s mortgage has a certain priority.

The title insurance policy insures the property subject to exceptions. These exceptions are concerns that the title company has regarding something on the chain of title, or off the record.

A lawyer can work with the Title Company to delete these exceptions in several ways. The lawyer can bring forth evidence to show that a defect has been cleared up, or can limit an exception, by showing the defect only effects a limited part of the property. Your attorney can also work with the surveyor to get a more accurate picture of encroachments on the property and use that information to negotiate coverage with the title company.

Your lawyer can also work with the title insurance company to obtain endorsements. Endorsements are agreements by the insurer to bear increased risk for certain events. For example, an endorsement may overturn an exception stated elsewhere in the policy or may modify a condition in the policy. Some typical endorsements deal with zoning, surveys, condominiums and subdivisions, or those that extend coverage to other parties, such as LLCs or other limited liability entities to whom you wish to transfer title.

If you are in the home buying process, and have questions about title work, please contact us at 314.862.2237

 

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