Real Estate Articles
Buying a Home
By 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, reviw 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
specfic 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.
Rathin Neogy is a Broker Associate with the Sterling Real Estate Company servicing
the San Diego county.
Note: Opinions expressed in this article are those of the author and do not
represent those of the Sterling Real Estate Company.
