Question 1

What are the basics of the sale and purchase of property?

Accepted Answer

A contract to sell real estate is an agreement between a buyer and a seller to convey title to a piece of real estate for a given price. Those persons identified as being on the title are the legal owners of the property. Other persons may have an equitable interest in the property. What that means is that before the property can be sold, those equitable interests or claims would have to be satisfied. For instance, a lender, lien holders, or perhaps a spouse whose name is not on the deed may as a matter of law have an equitable interest in the property. A contract for sale of real estate may contain a number of contingencies . A contingency is a provision within the contract that states that the contract may be declared null and void by one or both parties unless certain events occur. For instance, a standard provision within a commercial real estate contract is what is known as a feasibility contingency. The feasibility contingency generally gives the purchaser anywhere from thirty to sixty days to study the property to determine whether it can be used for the commercial purpose for which the buyer intends to use it. The study by the pur­chaser may involve a review of the zoning laws, studies of the soil to make sure that the land is suitable for the intended construc­tion, or engineering analyses to determine that the contour of the land is appropriate for the intended construction. A similar type of contingency is found in a residential con­tract. It is generally referred to as a home inspection contingency. A home inspection contingency usually gives the purchaser anywhere from five to ten days to have the home inspected to determine whether it meets with the purchaser's approval. At any time during the home inspection contingency, the purchaser may rescind the contract. Another contingency within most contracts is the finance contingency. That is, the buyer's obligation to settle is contingent upon the buyer being able to get the necessary financing or money from a lender on terms agreeable to the buyer in order to acquire the property. If the buyer cannot do that, then the buyer's obligation to settle on the contract is nullified. Once all of the contingencies have been removed, the buyer and the seller are irrevocably locked into going to settlement. A real estate settlement typically consists of the parties appearing either at a lawyer's office or the office of a settlement agent. There the seller signs a deed to the property. The purchaser signs whatever financing documents are necessary to obtain the loan. Then, a variety of other documents may be signed in order to satisfy the requirements of the institutional lender who provides the money for the purchase of the property and the title insurance company who insures that good and marketable title passes to the buyer. In going to settlement or closing (the terms are generally used synonymously), title to the property is conveyed from a seller to a purchaser. The conveyance of title is accomplished by a docu­ment referred to as a deed. A deed is a written instrument signed by the seller, identifying the property in question by precise legal description, and stating the nature of the title interest being conveyed by the seller to the purchaser. The deed may then be recorded at the courthouse to serve as a notification to the entire world that the seller is no longer the owner of this property but on the date in question has conveyed the property to the purchaser. The conveyance is considered to be effective when the deed is physically delivered by the seller to the purchaser. The delivery normally occurs at settlement when the seller signs the deed and then tenders it to the settlement agent who acts on behalf of the purchaser. There are a number of different forms of title ownership that may be conveyed. The most common forms of title ownership are referred to as legal title and equitable title. Legal title is determined by looking at the deed to determine who at that point in time is recognized by the deed as the owner of the property. Equitable title refers to the interest another person or institution, such as a bank, may have in a piece of property. Different jurisdictions handle real estate financing in different ways. In some states, the real estate financing that is utilized for a purchaser to buy real estate is a mortgage. In other instances, it may be a deed of trust. Although those different documents can have significantly different meanings, the effect is much the same-giving a security interest in your real estate to the lender who loaned you the money in order to acquire the property or to refinance the property. If you do not make your monthly payments in a timely fash­ion, the lender may decide to foreclose. If they foreclose, that means they are going to sell your property at a public auction where anyone could come in and bid on your property. The objec­tive of the lender in that instance is to recover all of the money loaned to you that is still outstanding, plus any interest that is due at that point, along with any expenses, trustee and/or attorney's fees that they have incurred in having to foreclose.

Question 2

How do you determine who has title to a property?

Accepted Answer

Sometimes, in the course of dealing with a piece of real estate, there may arise an issue of who owns it. Every state has its own way of recording ownership interest in real estate. One way of determining the owner of a piece of real estate is to call the local real estate tax office. The tax office should have a record of who they report as being the owner of the reed estate. Those records are, however, not always reliable. In order to determine the true owner or owners of a piece of reed estate you may need to have a title search done. There are title examiners or title insurance companies that ore available to do that for a fee. That is probably the only sure way to determine who all of the owners are of a piece of real estate as of a specific date. A title examiner; in determining ownership interest, will check all of the various indices at the local courthouse (or other governmental office building where deeds and land records are maintained) to determine who the last person to have been deeded that property was. This may tell you who the title owner of the real estate is as of that date; but it does not tell you whether there could be any other persons that might have a right to claim some interest in that property. As such it may be necessary to do a historical search of the chain of title going back many years to determine who all the other title owners had been. To do a thorough search of the title, it would be necessary to determine whether during the ownership interest of any of the title owners there had been any liens noted of record that might apply to the property. Liens may come in the form of tax liens, mortgage liens, deeds of trust, mechanics liens, or judgment liens. If there have been any such liens; it must be determined whether those liens have been properly released so that they no longer apply to the property. If any of the title owners passed away during the period of their ownership of the property, it may be necessary to check the will index to determine whether their will is of record. If it is, then their will must be examined for what it indicates as far as the transfer of this property. If there is no will, additional searches at the courthouse or recorder's office will be necessary. Suffice it to say that in many states the determination of the true owners of a piece of property can be very complex. If you are simply interested in general information as to ownership interest, reliance upon the tax records may be sufficient. If, however, you are contem­plating purchasing real estate or filing a legal action against the property owners, it is advisable to have an appropriate title search done of the property to make sure you are acquiring good title or suing the correct owners.

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