When purchasing real estate, a buyer generally requests that the seller provide title insurance.
The first step to obtaining title insurance is for a title company to do a title search. The results are given to the buyer in the form of a title commitment that shows everything that has been recorded against the property that could affect the legal rights to own, possess, use, control or sell the property.
Examples of what may show up on a title commitment are covenants, easements, road maintenance agreements, encroachments and liens on the property. It is imperative for a buyer to review and understand the recorded documents that will transfer with the property.
In the event of utility easements, the buyer should determine if the utilities are already installed or if the right to future installation exists.
An additional mineral search can be done if oil or gas exploration is an issue. This search will show who owns the mineral rights and if the mineral rights are leased. This search can be expensive, and legal assistance is recommended if items are identified that cause concern.
The contract will give the buyer rights to review the title commitment and to terminate the contract if there are title matters unacceptable to the buyer.
Along with recorded documents, the title commitment will outline what is required by the title company to perform the closing. If a new loan is being used, it will outline who the lender is and the amount of the loan. If there are liens on the property, the commitment will note any amounts that needs to be paid and to whom. Past due taxes or homeowner association fees will be shown, as well as outstanding judgments or liens against the buyer.
In Durango, we have three title companies. In the event the seller of a property wants to use a title company from out of the area, my recommendation would be to have the buyer pay for their own policy through a local company.
This happens frequently if the property has gone through foreclosure and the seller is a financial institution that may have a financial arrangement with its own title company.
There have been many instances over the years of title companies that have closed or absconded with a consumer’s money, often in the hundreds of thousands of dollars.
In the event of a title claim or mistake made at closing, a local company will be easier to work with to resolve the issue.
Also, fees vary and a consumer should do his homework when picking a title company.
Gina Piccoli is a Realtor at Coldwell Banker Heritage House Realtors in Durango. She can be reached at gina@realestatedurango.com.
