Real Estate Articles
Factors to Consider when Buying a Home
Rathin Neogy, MBA
Buying a home is one of the most important decisions a buyer ever makes and
there are various reasons why one has to be careful before you buy. Your interests
are better protected if you work with a reputable buyer’s agent.
Once you have found the home you wish to purchase, you need to be fully
aware of the various legal and administrative issues involved in purchasing
a home. Your real estate professional should be able to guide you.
Before signing the purchase agreement, review the sellers transfer
disclosure statement (TDS) carefully. Also ask for a preliminary
title report (or Prelim) from the seller’s agent. The listing
agent usually opens escrow with a title or escrow company when the listing
is obtained and this report is run by the title company and should be available
to the buyer upon request.
This report provides you with the opportunity, prior to purchase, to review
the details of ownership interest as well as what liens are on the property.
The Prelim is a report that is prepared prior to a Title insurance company
issuing an insurance policy. This report shows the ownership interests of a
specific property, together with the liens and encumbrances that exist. By
reviewing, in advance of purchase, title defects, liens and encumbrances that
exist, a buyer has the timely opportunity of discussing these issues and to
seek removal of items referenced in the report that are objectionable to the
buyer prior to the purchase.
The Prelim identifies what has been recorded relative to the property and the
parties of all transactions upto the date of the report. Examples of recorded
events include a lien against the property for an unpaid court award, unpaid
property taxes, mortgage liens, home equity liens, different types of easements,
CC&Rs, etc.
All these recorded items are listed in the report as “exceptions”
and the buyer needs to know what will remain as “exceptions” from
the title insurance policy coverage and what will be eliminated or released
prior to the transfer of title.
The buyer is interested to know the extent of their ownership rights after
transfer of title. Remember that a Prelim does not disclose the complete condition
of the title to a property but gives you a “heads-up” of what problems
may be encountered. Once you have decided on buying a property, you should
discuss with a reputable title insurance company or real estate attorney on
how you should go about clearing unwanted liens and encumbrances. Also you
should ask your title company that you want an “owner’s policy”
which protects you the homebuyer. A “lender’s policy” is
less expensive, but covers the lending institution and not necessarily the
owner.
