Understanding how to review a chain of title and format the examination utilizing a streamlined methodology is an essential part of the title commitment process. To that end, I am willing to share my knowledge and many years of experience in performing this vital service.
Because of the unique characteristics of the title industry, our profession is less known than other participants in a real estate transaction, whether that be an attorney, lender or realtor. For the most part, there are no courses taught in school, no guidance counselors talking with students about our field or recruiters being invited to attend career day at your local college. Yet, we play an important role with sellers and buyers that want to be a part of the "American Dream" of home ownership.
As I will discuss in greater detail in future articles, completing an examination of title in conjunction with creating a commitment or binder involves many different parts that ultimately make up a title report. For now, let's briefly touch on the key elements that comprise a title exam.
You'll start by looking through your search package, as provided by your title searcher or perhaps a third party vendor. This I compare to traveling along a highway (or in this case, a property's chain of title) and knowing which signs (otherwise known as instruments) are relevant to this trip (or for the purposes of this discussion, title examination). At minimum, you need to find the last deed of record and look for the grantee, who is more than likely the current owner (though there are exceptions to that rule and we'll revisit that at a later time). Next, you will want to review the legal description and confirm it is correct. Then you'll want to check for any mortgages or other encumbrances of record. If it is clear, perhaps raise a note on title that says just that. Same for any possible name judgments or liens that may affect your parties. Other possible real estate instruments may include court cases, lis-pendens notices, affidavits and so on (to be explored further at a later time). From there, you will then look to include any non-recorded requirements, such as municipal, transfer tax, martial rights, association letters, etc. After that, you will need to add the pin number and relevant tax information. And in many cases, the borrower's lender will want to see a 24 month chain of title, as to the current (and previous) owner.
Now that you have moved on to the Schedule B exceptions, this is where you'll raise building lines, easements and covenants, conditions and restrictions of record. A copy of the subdivision plat, a searcher abstract, grant of easement, declaration or other documents should clue you in as to what should be raised. Any other matters that will remain on the final policy, should also be included here.
Once you have reviewed the search package and marked up your worksheet (or if examining online, checked off the appropriate exception boxes), you have completed your examination.
Depending on your organization's workflow, you may be responsible for completing and issuing the title commitment on your own, or hand off the file to a typist and proofreader, looking to make corrections before the issuance of title. Each company has their own methods on how that is completed.
As you can see, plenty of time and effort is invested to deliver a best in class product and service. Consider this blog summary a brief guide and look for more articles in the near future that goes into greater detail. Best of luck to you on your journey examining title to real property. Remember, you are one part of a larger effort in supporting customers as they make in many cases, the largest purchase of their lifetime and you are helping grow our economy as well.
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