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You Have The Right To...

You must go down to town hall personally to check ALL records pertaining to the subject property! This will enable you to verify all information in the real estate listing and any other data sources. You and the client can also confirm any other information that has been represented about the house. If you or the client send a third party to town hall to check the records, and they miss something, it's the client's neck and money that's on the line! So go and check the records yourself. Because if it's your mistake for not verifying certain information, then the client may want you to reimburse them for any expenses they incur.

Your client has a right to know everything about the subject property. Often a Realtor, or other third party to the transaction will say, "Oh, you don't need to check the town hall records. The attorney, appraiser and the title company all take care of that for you." DON'T BELIEVE THAT FOR A MINUTE!!!!  If you or your client leave the town hall records check to someone else, then you'll both probably learn the hard way that important items are often missed. I went through this experience myself when my brother and I were selling one of our rental properties. The buyer was getting a FHA mortgage loan. With these loans, the lender requires a more extensive search into the property records than the search done for a conventional mortgage loan. This search turned up a list of building violations and missing permits that were from a prior owner of the property. Even though the violations were not caused by my brother and I, we still were held responsible for them. The reason for this is that the building department doesn't care who owns the house. All they care about, is that the property is safe and everything adheres to the local building codes.

After these problems surfaced, my attorney contacted the title company that we had paid for the title insurance policy and the title records search. Our title company said that there is a clause in just about all title policies dealing with this type of situation. The clause states that the title company is not responsible for any building, zoning or other violations. A title company is only concerned with the ownership interest in the subject property. Ownership interest is what is stated in the deed for the property. This has absolutely nothing to do with building permits, zoning, taxes, and many other aspects at town hall. As a result, we spent thousands of dollars and delayed the closing for months, in order to resolve these old violations created by a prior owner. This experience should put an end to any third parties trying to convince your clients that the attorney, appraiser, and title company check town hall thoroughly. That is, unless the appraiser is an "A to Z Appraiser."

I've done foreclosure appraisals for banks, where the banks had the houses re-appraised after they took back the titles through foreclosure proceedings. During my appraisals, I turned up problems in the deeds that weren't identified when the banks originally loaned the mortgage money. So now the banks had to spend the time and money to correct mistakes created by the prior owners of these properties. This situation could happen to you and your clients if you don't follow my advice.

Here's some history trivia I found on several web sites  about property titles and legal ownership of real estate:

Did you know that Abraham Lincoln's family lost their homes several times because of "cloudy" title?

On June 12, 18 06, Thomas Lincoln married Nancy Hanks. (Little is known about Abe Lincoln's mother except that she came from a very poor Virginia family. She was completely illiterate and signed her name with an X.) After their marriage the Lincolns moved from a farm on Mill Creek in Hardin County, Kentucky, to nearby Elizabethtown. There Thomas Lincoln earned his living as a carpenter and handyman. In 1807 a daughter, Sarah, was born. In December 1808 the Lincolns moved to a 141-hectare (348-acre) farm on the south fork of Nolin Creek near what is now Hodgenville, Kentucky. On February 12, 1809, in a log cabin that Thomas Lincoln had built, a son, Abraham, was born. Later the Lincolns had a second son who died in infancy. When Abraham Lincoln was two, the family moved to another farm on nearby Knob Creek. Life was lonely and hard. There was little time for play. Most of the day was spent hunting, farming, fishing, and doing chores. Land titles in Kentucky were confusing and often subject to dispute. Thomas Lincoln lost his title to the Mill Creek farm, and his claims to both the Nolin Creek and Knob Creek tracts were challenged in court. In 1816, therefore, the Lincolns decided to move to Indiana, where the land was surveyed and sold by the federal government. In the winter of 1816 the Lincolns took their meager possessions, ferried across the Ohio River, and settled near Pigeon Creek, close to what is now Gentryville, Indiana.

Even Daniel Boone, the first pioneer of Kentucky wilderness, lost every inch of his once vast landholdings because he had "the wrong kind of title papers." It was the anxiety and outright losses of the Lincolns and other hard-working Americans that gave rise to today's title insurance industry. The first land title insurance company was founded in Philadelphia in 1876. Just a few years later in 1889, the firm that was to become First American Title Insurance Company was established to protect buyers against the hidden hazards of real estate ownership: forgeries; faulty surveys; hidden liens; conveyances by a minor or mentally incompetent person; the false representation of a married person as being single; and many other title defects. Even the most complete search of records may not reveal all the defects in a real estate title.

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