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A buyer needs to acquire full title to a property from the seller. This means that the seller needs to have full title for him to convey full title to the buyer.
There are different types of deeds — general warranty, special warranty, bargain-and-sale and quitclaim — that are typically used. Each type gives the buyer a different level of confidence in the seller’s ownership and his ability to convey the property fully.
Even with a General Warranty Deed, buyers need to understand that a deed’s guarantees are not sufficient evidence to prove seller ownership. Deeds can contain errors, both of omission and commission. To confirm a seller’s deed, buyers need to find evidence of title.
Ownership is proved through evidence of title, not a deed. When a buyer does his or her due diligence, they should contact the county in which the land is located in to ensure the property is registered under the company or persons name, as well, ensure there are no outstanding back taxes or liens on the land. You may have to go a bit futher though, continue reading.
It is the buyer’s responsibility to find evidence of title, that is, to show that the seller can convey with marketable title.
A title search should look beyond recorded documents like deeds, utility easements, mineral leases and mortgages. Certain types of liens are not recorded, such as real-estate taxes and inheritance taxes. A title search will also not discover encumbrances on the seller’s ownership that were not recorded, like a contract giving another party some right to use the property or cut its trees.
Do a little bit of title searching on your own before submitting buying. A full title search goes back to the property’s origin; most, however, only go back 40 years or so as a matter of state law or custom. It’s often better to go back farther than 40 years, especially if the property has not changed hands much.
The buyer can usually trace back the seller’s deed on his own, at least three or four exchanges before it gets complicated.
The chain of title goes back to the origin of the property. It shows ownership, encumbrances and liens. If the chain has a gap, it’s often called a “cloud on the title.” In that event, a suit to quiet title is brought. Everyone with a claim to ownership appears, and a court decides the matter.
The summary report of what is found in the public record is called an abstract of title. In most cases, an abstract is the basis for the issuance of a certificate of title, which is an opinion by the buyer’s lawyer or other title researcher about the title’s condition as of the date when the certificate is issued.
A certificate of title does not guarantee the seller’s ownership. It will only cover things that are known from the public record. An attorney’s title opinion is similar to a certificate. Generally speaking, a certificate that finds no defect in the public record is good enough for financing to be arranged and the purchase to go through. But I advise buyers to look beyond the public record.
Buyers should beware of sellers offering deeds with “title exceptions.” An “exception” almost always means something isn’t right with the title, and the seller wants to sell the property and transfer the problem to the new owner.
Much of the time all of the buyer’s worries about the warranties in a deed and the details of a title search amount to nothing, because the title is clean.