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title & escrow
The Title Review Process
When purchasing a fee simple interest in a piece of property, you are aquiring the highest form of estate (ownership) interest in it. Basically, you will own it completely without any limitations, and can do what you want on it (limited by government laws). Most transactions convey this level of ownership throught the grant deed.
However many purchasers are unfamiliar with, or are surprised to find other "hidden" conditions or ecumbrances that can significantly limit your use of the property. This is referred to as a "cloud on title".
The Preliminary Title Report ("Prelim") is an important document to review prior to entering into or closing any transaction, as it will summarize any conditon of the property that will encumber your use.
Even more important, is obtaining all the underlying documents that are referrenced within the Prelim. These underlying documents will fully explain the details of each encumbrance. Such conditions that may delay or derail a transaction can be:
- Non-legal Parcels - the legal description in the Prelim should conform to correct California Subdivision Map Act (CSMA) verbiage.
- Oil, Mineral & Gas Rights - Although uncommon in the Bay Area, these rights, owned by some other entity or person, may prevent you from using the surface of the land.
- Actual and All Fee Owners - Ensure that the seller(s) name(s) are the same as on the purchase agreement, and that all parties are accounted for.
- Liens & Assessments - Non-tangible monetary issues such as delinquent mortgages, credit lines, special assessments, mechanic liens, property taxes, etc. can cloud title.
- Easements - A very common limitation placed on property by your neighbors, government agencies or utility companies. Examples are telephone poles, sewer lines, driveways, etc.
The best advice is to make certain that the property you are purchasing will be free and clear of as many liens and ecumbrances as possible by the close of escrow. Otherwise make sure your title insurance policy will cover you againt such items.
