What does the preliminary title report and commitment for title contain?
In addition to the findings of the title search, the prelim includes the legal description of the property and this should be checked with the legal description on the sales contract. The sales contract describes the property three ways; the street address, the parcel identification number or the assessor’s number, and the legal description.
There will often be a plat map showing the location and dimensions of the property and often a partial plat map of the subdivision. There may be drawings showing easements of the property on the plat map.
In the description of the property, easements will be described; most property contain utility easements. If there is common property, this too will be noted on the commitment.
If there is a Homeowner’s Association, the commitment will make reference to that fact and indicate where the HOA documents can be found in the recorder’s records. This will include the original documents for Covenants, Codes and Restrictions, and any amendments.
CC and R’s originally were put in place for the benefit of the builder and upon the build out of the subdivision, the Association is turned over, along with any common property, to the residents of the subdivision. There is nothing which requires a HOA; I live in a subdivision built in 1979 and upon the transfer of the “Association” to the residents, the residents promptly voted to abandon the HOA. This document is recorded.
Builders protect their investment by requiring standards so a resident doesn’t paint his house purple or store junk cars in the front yard. This would make the area less desirable for potential buyers and infringe upon the builder’s ability to sell new homes.
HOA dues must be brought up to date if in arrears, prior to transfer of title. Likewise, property taxes will be referenced and must be current prior to transfer of title, including late fees and penalties. The name of the association and management company with contact information is specified.
All liens on the property must be cleared prior to conveyance. And in community property states, the marital status of the buyers are specified. If a married person takes title alone, the spouse must sign a disclaimer deed which is recorded.
And of course any and all mortgages are itemized with the recording number, and including any Home Equity Lines of Credit. And the deed must be recorded from the grantor to the grantee.
Requirements to be fulfilled prior to recordation are itemized as well as the manner in which the documents must be signed, such as margin requirements.
The preliminary title report and commitment for title are important documents and must be read by the buyer, the seller, and both agents so that any errors can be corrected or problems with tile be solved prior to recordation.
Archive for the ‘Taking Title to Real Property’ Category
What does the preliminary title report and commitment for title contain?
Why have a title search? Truthfully you may be purchasing a piece of property which actually may not be yours. Liens follow the property, not the people.
Suppose I sell you a piece of property at a rock bottom price, offer to finance it for you, tell you I will do everything, and all you have to do is give me earnest money of $20,000. It’s such a bargain you hop right on, so you give me good funds for $20,000. We sign the paperwork and alas, the property is now yours. I file all the paperwork and you think I am absolutely wonderful….Until you realize when you purchased that property from me, you also purchased all the liens; they are now your responsibility.
They can be mechanic’s liens for work completed but not paid; medical liens from doctors and hospitals, judgment liens handed down by a court for accidents or other legal entanglements, back child support, internal revenue service liens, HOA liens for back dues–liens for just about anything—you have just purchased all of them and they could be hundreds of thousands of dollars.
That’s just one of the reasons you need a title report. Maybe this is a second marriage and the property was purchased during the first marriage and there are children by that marriage. These children may have claim to the property when that spouse is deceased, and the living spouse actually has nothing.
Perhaps one spouse has died and the surviving spouse has not probated the estate. This happens frequently and the property is in the name of both spouses. A dead person cannot have claim to a property, it must be dispersed as the will deems or intestate (by the state). This must be completed before any transfer of property so that the legal owners can be found and possibly agree to the transfer.
Very often it is an investigative mission to find surviving heirs. I had a situation where the woman who was in a second marriage, wanted to sell her property. She had children by her first marriage and her first husband had died. The wife never took care of the first husband’s estate. He wanted his children to receive his portion of the property.
Immediately that means the wife receives only half of the value of the property, not the full value she anticipated. There were five children, spread all over the country. One of the children had died so his heirs were in line to inherit one fifth of one half of the proceeds of the property. We couldn’t find him and this was going to tie up the conveyance of the property. Finally we located him, and then we were able to put the property on the market. Had we a contract waiting, we probably would have lost the deal.
Good agents always check title prior to putting property on the market. Usually there is no problem, but sometimes a real estate/estate attorney needs to be called to unravel the title in a legal manner. Title insurance insures that good title is being passed to the buyer. Always read the preliminary title report and immediately take care of any red flags.
The manner in which a buyer takes title to a property in Arizona has legal and tax consequences.
Arizona is a community property state. Neither the real estate agent nor the escrow officer can give legal advice on how to take title. However general guidelines have been published and are reproduced here. These are definitions provided by Fidelity National Title Agency, Inc. Thank you.
COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP: Community property with right of suvivorship is a method of ownership by husband and wife that vests title in the surviving spouse upon the death of one of the spouses.
COMMUNITY PROPERTY: Arizona is a community property state. There is a statuary presumption that all property acquired by husband and wife is community property. Community property is a method of co-ownership for married persons only. Upon death of one of the spouses, the deceased spouse’s interest will pass by either a will or interstate succession.
SOLE AND SEPARATE: Real Property owned by a spouse before marriage or any acquired after marriage by gift, devise, descent, or specific intent. If a married person acquires title as sole and separate property, the spouse must execute either a disclaimer deed or quit claim deed.
JOINT TENANCY WITH RIGHT OF SURVIVORSHIP: An undivided interest in property taken by two or more joint tenants. The interest must be equal; occurring under the same conveyance, and beginning at the same time. Upon death of a joint tenant, the interest passes to the surviving joint tenant or tenants, rather than to the heirs of the deceased. If a married couple acquires title as joint tenants with right of suvivorship, they must specifically accept the joint tenancy to avoid the presumption of community property.
TENANCY IN COMMON: A method of co-ownership where parties do not have survivorship rights and each owns a specific undivided interest in the entire title.
CORPORATION: Any group of people “incorporating” by following certain statutory procedures many take title to real property in the name of the corporation.
GENERAL PARTNERSHIP: Title may be taken in the name of a general partnership duly formed under the laws of the state of the formation of the partnership. A partnership is defined as a voluntary association of two or more persons as co-owners in a business for profit.
LIMITED PARTNERSHIP: A partnership formed by two or more persons under the laws of Arizona or another state and having one or more general partners and one or more limited partners. A certificate of limited partnership must be filed in the Office of the Secretary of State, a certified copy of which must be recorded.