What You Need To Know About Title Reviews

Part of the process of buying property in New York is the title review. You'll want to hire a real estate lawyer to do this, even though there are title companies that will do it for you. The title review is one of the more important tasks during a home purchase because it saves you a lot of time, trouble, and money. It can even show you that a particular property might not be the best choice for you.

Title reviews can show whether a title is clean and free of any issues that could cost you later on. Never skip this part of the home-buying process.

What Title Reviews Are Supposed to Find

Title reviews are straightforward inspections of the house and property title to find liens, debts, and other adverse items. A clean title has none of these; when you buy that house, the house is yours.

Title reviews also look for things like easements that give others the right to be on your property. Common easements include city- and county-related easements for utility companies, for example. Neighbors may also use easements to access parts of their own property, such as when a couple of houses share a small, private road or driveway.

What's a Defect in a Title?

A defect in a title is something that makes the title not clean. Unpaid liens against the house, for example, are defects; the current owner would have to remedy those (by paying them off) in order to make the title clean. They might be counting on the money that you're paying toward the house to pay them, but you'd want those liens taken care of before the title goes into your name. Once the title is in your name, you have to deal with any defects.

Defects aren't uncommon; you just need to know about them before you make any more of a commitment. If the review does uncover defects, and the current owner doesn't want to deal with them, that's a red flag. That means you need to rethink your purchase before allowing any of those defects to be placed in your name. And if you're trying to get a mortgage, the lender may refuse to fund a loan for a house that has title defects.

What Consequences Do You Face if You Skip a Title Review?

If you skip a title review, you run the risk of discovering a title defect after you've committed to spending all this money to buy the house. You could find instances of adverse possession, which could render your claim to the house moot and leave ownership in the hands of the other person who had taken possession of the property. 

And, of course, if you're getting a mortgage to pay for the house, the lender could refuse you until those title defects are cleared up. If you were to default on the loan, then the lender would have to deal with title defects. 

Where Does Title Insurance Fit Into All This?

Title insurance helps cover you and the lender financially if another defect is discovered later on. First, you'll have a real estate lawyer do the title review and handle any defects that they discover, and then you'll get title insurance. This is standard when getting a mortgage, although having the title review done and getting title insurance is advisable even if you're paying cash for the house upfront.

Navigating the process of buying a property can be intricate, but understanding the importance of a title review can make the journey smoother and less daunting. Title reviews serve as a protective measure, providing you with valuable information about the property you intend to purchase and potentially saving you from future headaches. While title defects may occur, they are often addressable and shouldn't discourage you from pursuing your dream property. Engaging a real estate lawyer from a law office, such as that of Steven Kurlander, and securing title insurance can provide added assurance.