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Lecture Notes: Title Exams

 

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TITLE EXAMINATION:

 

- Generally, search the records for about sixty years ago to the present, or longer if there is a special concern. Most states will have a statute that provides a cut-off date so that one doesn't have to go back in history too far to make a difference. Usually there will be a record room in the county courthouse where the various real estate documents are kept. Look at the following:

 

1. Grantor/grantee indexes: There will be an index of the last name, alphabetically, of all people who became grantees of some real estate interest during the year. The index will reference the document creating the interest, and where it is recorded. There will also be an index of the last name, alphabetically, of all people who were grantors of some real estate interest during the year. The index will refernce the document granting the interest, and whre it is recorded. Both the grantor and grantee indexes will record the names of the grantors and grantees, the date of the transfer, the date of recording the transfer document, the nature of the document (deed, mortgage, etc.) a brief description of the property, and the filing address of the recorded document so you can locate the document and read it, or even copy it if you want. When you find a grantor name, search back each year in the grantee indexes so you can find the document that granted the right to the grantor, that is, see how they came to own the right that are now transferring. When you find a transfer of a security document - mortgage, deed of trust, security deed - you are then looking for a discharge of that document. Failing that, these rights should be discharged or managed somehow in the closing of the sale.

 


2. plat indexes: These will be an index and copies of all plats recorded in the county, showing subdivision of land into building lots. You want to make sure that the legal description of the lot created matches the legal description in the deeds being transferred afterwards. Also, frequently restrictive covenants are contained in the plats. These covenants are of record, in the plats, so any subsequent purchasers of the property will take with notice, and will be subject to the restrictions. Make notes of the restrictive covenants.

 


3. Other encumbrances:

 

- Judgments: Check for judgments in lawsuits naming any of the owners in the chain of title. If you find any, look for Satisfaction of judgments. There will likely be an index to pending judgements.

 

- tax liens: unpaid real estate taxes are liens. Also, unpaid income taxes may have been reduced to judgment and recorded as a federal tax lien, which is usually separately indexed. A federal tax lien lasts for 10 years.

 

- security interests: If a UCC security interest involves both the land and personal property, it may be necessary to lk up UCC finance statements to see if there are encumbrances.



- lis pendens: Civil suits involving the parties may be lis pendens, that is, a lien against the property for the amount in controversy while the suit is pending and before final judgment.

 

- probate records: estates. custodian matters. trust matters.

 

- mechanics liens:

 


Contents of a title report:

- Name of the title owner of record.

- legal description of the property

- identify all encumbrances that can be cleared at closing

- status of real estate taxes

- easements, covenants and any other restrictionsons to marketability (title is marketible when it is free from doubt. Owner can hold the land in peace, free from the hazards of litigation or any adverse claims)

 

 


When to do a title examination? Very close to the time of closing, so that there will be little chance of encumbrances being filed for public record after the exam but before the sales transaction. (Surprise!)