A Home Of Your Own
Buying Your Home
Contract To Closing
Home Title Transfer
Once a home goes under contract, title work is initiated in order to allow the clean transference of the home title to the new homeowner.
What exactly does transferring “clean” title mean? The title, in layman’s terms, is the right of ownership to the home. It can be held individually or jointly for a married couple, where both parties have 100% ownership and rights of survivorship in the event one were to pass away.
In Iowa, we have a Title Abstract. This is a legal document that is essentially the complete legal history of the parcel of land the home resides upon. The abstract is a vital part of the real estate sale process. Once a property is under contract, the seller hires an abstract company to do an “abstract continuation.” This process will ensure all relevant public records (new since the last sale) are added to the abstract. Abstracts must be updated every time the property changes ownership.
Once the abstract is updated, an attorney hired by the buyer (or more likely by the buyer’s mortgage lender) will review the abstract to give a “Title Opinion.” This opinion will identify any issues with a title so that the buyer knows whether there is anything they could potentially inherit if not otherwise addressed.
Potential issues include things like mechanic’s liens, where a past contractor was not paid for service performed; IRS liens due to unpaid federal taxes; judgments caused by past small claim or district court action; or child support liens due to unpaid child support to an ex-spouse. These items MUST be fixed prior to transferring title. This is what is meant by having a “clean” or “marketable” title.
Another informational item identified in a Title Opinion are easements for the property. An easement is a legal right to use someone else’s property for a specific purpose. Many properties have easements and so they are not automatically a bad thing or a disqualifier. For example, municipal easements to allow the city access to a water or sewer line are very common; or the property might have a common driveway shared with a neighbor. Again, these should not be considered disqualifiers but they should be known as they could potentially impact how you can use the property. For example, fences may not be allowed to be erected over a municipal easement. Thus, it’s important to know and understand these restrictions in advance prior to purchasing.
If home title issues are identified within the Title Opinion, they must be cleared by the seller before closing can occur.