 | Jeff Otto is Branch Manager of Lawyers Title Insurance Corporation which is a member of LandAmerica Financial Group, Inc., a premier national provider of title insurance and settlement services. Lawyers Title has been in the local marketplace since 1955. Jeff has been with Lawyers Title for 34 years, the last 24 right here in Wichita. You may contact Jeff at (316) 682-9600 x 201 or by e-mail at jotto@landam.com |
Real Estate
2004-10-01 15:07:00
What if the title is not clear?
ANSWER: If the title to the real property is not clear, there may be a number of remedies available to the parties to the transaction…and in rare cases, there are not. a) In the event that the present owner has had liens or judgments filed against the property during his/her ownership, the current owner may have to pay the liens, judgments, etc. in order to clear the title for sale. b) If the current owner has an Owner's Title Policy and the defect in title was prior to the current owner obtaining the property, the issuing agent can request of the issuing Underwriter, an Indemnification of what is known as the backtitle and the new title agent/underwriter will then possibly insure over the defect. Example: A 17-year-old mortgage shows of record. The bank has gone out of business since originating the loan, so no Satisfaction of Mortgage can be issued. Current insurer gathered sufficient information to underwrite the lien without needing the Satisfaction filed, but this also means it will stay as a matter of record indefinitely, thereby always being a lien against the property. The new insurer then takes the Indemnification from the current insurer, so that the lien can be insured against by new insurer. c) Sometimes, in the case of a curable defect, escrow monies may be collected at closing and held by the title insurance company in a trust account until the defect can be cured or remedied. d) The property may be deemed un-insurable by the title agency and there is no remedy for the defect, making the property "un-sellable". In this case, run, don't walk, from the purchase of this property. e) The buyer may elect to accept the defect (depending on what it is) with the seller adjusting the sales price accordingly. This is an option when the Buyer is paying all cash for the purchase with no loan company involvement, or where the property is clear of mortgage, and the Seller is possibly doing an owner carry for the financing of the property. But it is never a good idea to let an attractive financing package overrule common sense when there's a cloud or encumbrance on the title. More next month…
