Title Issues

One of the most important issues that must be investigated and addressed in any real estate transaction, whether a sale, purchase or even a lease, is the question of the seller’s or landlord’s title. “Title” refers to the ownership of real estate. Clear title refers to the uncontested and unencumbered ownership of real property. A property lacking clear title is said to have a “cloud” on its title. A cloud on title may arise, for example, by a lien for nonpayment of a promissory note secured by a deed of trust on the property. Clouds on title may be removed by bringing an action to “quiet title.”

Before purchasing property, the purchaser will usually hire a title company to search out the chain of title and provide a title report so that a purchaser will be assured the title is clear of any claims. In most real estate transactions, insurance companies issue title insurance based upon the chain of title to the property when it is transferred.

In our real estate marketplace, the concept of “marketable title” is critical. Marketable title refers to holding ownership of property reasonably free of defects and liens that would subject it to a lawsuit. It is a good and clear title, without adverse claims against it that would cloud the title. Marketable title allows the owner to sell the property at fair market value without objection from the buyer. To ensure marketable title, a title search can be performed before purchasing real property, to investigate the existence of encumbrances such as mortgages, real estate taxes, liens for sewers, roadways, sidewalks, and other municipal improvements, federal taxes, government claims, legal judgments, foreclosures, condemnations, covenants, easements or numerous other “clouds” on title.

When a sale of real property is under consideration, a preliminary title commitment to issue a title insurance policy after payment of a premium is issued by a title insurance company to guaranty clear marketable title at the close of the transaction. Records are searched by examining the official courthouse records, where all recorded documents, judgments, liens, tax assessments, special taxes, and other matters, such as divorce and bankruptcy, are filed. The results of this examination are set forth in a preliminary title report or "commitment" to insure the property. The preliminary title commitment is a means for the title company to inform all parties of all known burdens affecting the property and committing to issue its policy when certain requirements have been met. This assurance of a title commitment by a title company provides a safe procedure for purchasers and lenders to close transactions before the actual title policies have been issued. After the close of escrow, the title insurance company issues an owner's policy which is paid for by the seller and benefits the new owner. If a problem develops after the close of escrow, the title insurance company is then contractually obligated to defend the new owner and resolve the title problem at the title insurance companies’ expense.

Winsten Law Group has extensive experience in successfully counseling and resolving title problems, both in workouts without litigation, and in title lawsuits.

Please follow these links if your title issue is regarding:

• Easements
• Conditions, Covenants and Restrictions

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