Clearing a title starts with knowing what matters can affect the title. In the event that defects and/or encumbrances need to be cleared, it will be time to take action.
The first thing to remember when entering the title clearing process is that every transaction is different and will present different challenges.
Each title search could reveal a unique set of title issues. The kinds of defects will vary from transaction to transaction, and the actions needed to clear those defects will likewise vary.
It is important to understand this context because buyers and sellers should not expect every title clearing, and thus every closing, to go the same way. The process should involve the same general steps, but depending on the results of your title search, certain of those steps may take longer, may require more interaction with the seller, or may have roadblocks which are out of the title professional’s control.
Once your closing team knows what defects need to be cleared before a title insurance policy can be issued, they can get to work clearing those items. At this point, there are a variety of tools and methods at the closing team’s disposal to deal with these issues.
Certain defects will be relatively straightforward. Liens, for example, can be cleared by paying the underlying debt. The process generally goes as follows: the closing team identifies the lienholder and obtains the payoff amount. The lien is then paid as part of closing from the seller’s proceeds.
Some encumbrances may be more difficult or affect the rights of third parties, leading to a few more hurdles.
For example, the title search may reveal that a previous recorded document contains an error with its signature. This presents a problem for the chain of title. In order to remedy this problem, the closing team will need to find and obtain new documents from the person who improperly signed the original.
In general, it is a good idea to discuss your title commitment with your closing team to get a sense of the types of activities the team expects to undertake in the clearing process, and find out what will be needed from you.
Understanding what issues are affecting the title will help set expectations for the process and minimize stress as you move through it.
The information provided in Peak Title Professionals, does not, and is not intended to, constitute legal advice. All content is for general informational purposes only and is not intended to provide a complete description of the subject matter. Specific processes will vary based on applicable law. The title and closing process will be handled by a third-party attorney to the extent required by law. Product offerings vary by jurisdiction and are not available or solicited in any state where we are not licensed.
