A title search can turn up issues that could prevent a sale from closing. The property must have clear title to close. The seller must have the legal right to transfer ownership without liens or claims against the party being sold.

After the seller accepts a purchase agreement, the buyer may request a title search, or lender may request one prior to approving a mortgage.

According to the Purchase Agreement provided by the Minnesota Association of Realtors®, the buyer is responsible for obtaining the title services determined necessary or desirable by the buyer or buyer’s lender and providing a copy to the seller.

A title company or attorney can search the deeds, tax liens, divorce decrees, bankruptcy records, and divorce and child support orders to identify any judgments or claims against the property. A title search can also uncover pending lawsuits against the owner.

The seller agrees to use seller’s best effort to provide marketable title by closing at seller’s expense. In the event seller has not provided marketable title by closing the seller is given an additional 30 days to make the title marketable, or the buyer may waive the title defects by written notice to the seller. The buyer and seller may by mutual agreement extend the closing date further or cancel the purchase agreement.

One of the most common title issues I have seen is a satisfaction of mortgage wasn’t recorded when a loan was paid off, and the lender is out of business or the company was sold.

I have also seen delays when the title wasn’t updated when a spouse or trustee died. In some cases, the property had to go through probate before closing.
One of my sellers was notified that their neighbor’s mortgage was recorded against their property and luckily, they had title insurance so the insurance policy covered the cost to correct the error.

One seller was required to move their shed before closing, because it was encroaching on the neighbor’s property line.

Another closing was delayed because the seller had a tax lien more than the net proceeds, so the seller had to borrow money to close.

You can purchase title insurance to protect yourself and your mortgage lender from issues that might be discovered after closing. The cost for title insurance is based on the purchase price of the property and the loan amount. The lender normally requires the buyer to purchase title insurance for the lender, but it is an optional purchase for the buyer.

An experienced real estate agent, attorney, or title company can provide you with additional information and advice to assure you close with a clear title.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Realty, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.