The Record Search. A title examination is the real estate record search process that attempts to identify legal interests to a parcel of land. In Georgia, the process involves researching various indices for a period covering up to 50 years, and then manually reviewing the underlying title documents.
The most important reason to conduct a title search is first to identify the legal owners of the subject property. The secondary objective is to identify matters that will continue to affect the property after closing, such as restrictive covenants, rights of way, easements, and boundary line agreements, among others. Finally, the title examination attempts to identify liens, which much be satisfied at or before closing, as well as encumbrances or defects that must also be addressed. When you close with Georgia Title, the title examination is the first thing to occur after your file is opened. It does not require any special request since the closing can not occur, nor can title policies be issued, without a current title examination.
Insurable or Marketable Title, What's the Difference? Did you know that property sales contracts commonly require the buyer to close, even if defects are identified by a title examination prior to closing? For example, the Georgia Association of Realtors’ stock form agreement requires the seller to deliver either good and marketable title or insurable title. Marketable title is property free from known title defects. Insurable title, on the other hand, is a property with an identified defect but where a title insurer has agreed to issue a new policy which affords a limited protection against the defect.
In practice, buyers are generally not required to close on properties with significant title defects, since the more severe the defect, the less likely the property can be deemed insurable. However, situations do arise in which buyers are forced to close on title defects, against their will. Buyers should always have an attorney (specifically an experienced real estate attorney), draft the purchase and sale agreement or review the contract for signing. Buyers may be well advised to obtain the results of the title examination during a due diligence phase, or require that the seller deliver at closing only good and marketable title.
Is Your Property Fit for Your Intended Use? When property is being acquired for a special use or purpose, adequate provisions to review matters of title should always be factored into the terms of the purchase and sale agreement. In Georgia, it is common for buyers to negotiate a "free look" or "due diligence" period which will provide a buyer with the time and ability to exit the contract if necessary. It is always important to discuss title concerns with your real estate attorney prior to executing any purchase and sale agreement. This way, documents can be obtained for review within the allotted due diligence period, or custom tailored contractual provisions can be negotiated with the seller.
Title Exam + Survey = Best Expectation. Neither a survey nor title examination is a substitute for the other. Did you know that a title examination can come back perfectly clean, even though a serious defect exists? A title examination is a search of the real property records, but does not disclose matters of survey. A survey may depict boundary lines or improvements on a property, but excludes matters of title. For the best possible expectations, a buyer may opt to have a new survey performed, which should be audited by a real estate attorney against the title work. Georgia Title performs this service as a part of closing without any additional charge.
Title Exam + Survey + Title Policy = Gold Standard. Standard title policies exclude coverage for matters that would be revealed by a current survey. This means that standard policies work best when a new survey is performed for the closing transaction. “Enhanced" title policies (not available to all transaction types) provide survey coverage in return for a higher premium. However, under enhanced policies, structures other than the main dwelling structure, such as swimming pools, carriage houses and walls, may have limited coverage, subject to high deductibles and low maximum limits, or no coverage at all. Coverage varies by insurer. Please contact us to discuss your specific situation, since the best value in many situations is a current survey combined with a standard title policy.
We Cover Georgia Georgia Title & Escrow Co LLC accepts title orders for the entire State of Georgia. That's 159 Counties!
Does Your Purchase Agreement Call for "Insurable Title"? Understand the difference between "Good and Marketable" title and "Insurable" title.
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