Title review: Overview, definition, and example
What is a title review?
A title review is the process of examining and verifying the legal ownership and condition of a property’s title to ensure that it is free of any legal disputes, liens, or encumbrances that could affect the transfer of ownership. This review is typically conducted during real estate transactions, such as buying or selling property, to confirm that the seller has the legal right to transfer ownership and that no issues exist that could hinder the transaction.
The title review process involves checking public records for any existing claims, mortgages, or legal issues that may impact the property, such as unresolved debts, ownership disputes, or other encumbrances that could affect the new owner’s rights.
Why is title review important?
Title review is important because it ensures that the buyer is purchasing property with a clear and undisputed ownership history. It helps protect both parties involved in a real estate transaction by identifying any potential issues or risks before the transfer of ownership is completed. For buyers, title review offers peace of mind that they will not inherit problems associated with the property, such as debts or conflicting ownership claims.
For sellers, conducting a title review beforehand can help prevent delays or complications during the transaction and make the process smoother. Lenders may also require a title review as part of the approval process for a mortgage, ensuring the property is free from any legal issues.
Understanding title review through an example
Imagine that a family is purchasing a home. Before finalizing the sale, their lawyer or title company performs a title review to ensure that the property is free of legal disputes, unpaid taxes, or any liens placed by previous owners. During the review, they discover that there is an unresolved lien on the property due to unpaid property taxes. The buyer and seller work together to resolve the issue before proceeding with the sale, ensuring a clean title transfer.
In another example, a business buying a commercial property might require a title review to ensure that there are no pending lawsuits or disputes over ownership. The title review uncovers that the property has an easement for a neighboring business to access the property, which is then factored into the contract before the deal is completed.
An example of a title review clause
Here’s how a title review clause might appear in a real estate contract:
“The Buyer shall have the right to conduct a title review within [X] days of the signing of this Agreement. The Seller agrees to provide a clear and marketable title to the property, free of any liens or encumbrances, except as disclosed in writing. In the event that the title review uncovers any issues, the Buyer may request that such issues be resolved before proceeding with the transaction.”
Conclusion
Title review is a critical step in any real estate transaction, ensuring that the property being bought or sold is free from legal complications that could affect ownership rights. It protects buyers from inheriting problems related to the property’s title and helps sellers avoid issues that could delay or derail the sale. Conducting a thorough title review provides both parties with confidence and ensures a smooth transaction, making it an essential part of the due diligence process in real estate deals.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.