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Is a Title Review Important in a Real Estate Transaction?

Martinez Law Office, Inc Feb. 15, 2023

When buying, selling, or renting property, conducting a title review is an essential step of the process. Every real estate attorney knows that conducting a title review can help protect buyers from potential legal problems and disputes that may arise down the line.  

If you are not familiar with what’s involved in a commercial or residential real estate sale, you might not understand what makes conducting a title review so important. Feel free to contact Martinez Law Office, Inc. if you would like to learn more about what a title review is and how you can benefit from conducting one in your commercial or residential real estate sale.  

As a real estate attorney in Santa Ana, California, I help clients navigate the process of real estate transactions throughout Southern California, including San Diego, Los Angeles, and Orange counties.  

What Is a Title Review?  

A title review is the examination of all documents related to the ownership and transfer of the real estate to ensure that all titles are valid. This includes reviewing public records, deeds, mortgages, liens, judgments, easements, and other legal documents associated with the property in question. The purpose of a title review is to confirm that the seller actually owns the property and make sure that everything about the sale or transfer of property is accurate and properly documented according to state laws.  

The Importance of a Title Review  

It’s best practice for buyers and sellers alike to conduct a title review before any purchase agreement, sale agreement, or lease agreement is finalized. For buyers especially, conducting a comprehensive title review can help protect them from any potential legal issues in the future. It also ensures they know exactly what they are purchasing, whether it’s free from any liens or encumbrances on their land, and whether there are any restrictions on what they can do with their new property once purchased. 

The Process of a Title Review  

The process of a title review usually consists of the following steps: 

  1. A title search. The first step in a title review process is to order a title search. The title search will reveal any liens or encumbrances on the property being purchased, such as unpaid taxes or construction liens. It will also provide information on any parties who have an interest in the property, including previous owners or lenders. After all of this information has been gathered, it can then be compared to what has been recorded in public records to ensure accuracy.  

  1. A title insurance policy. The next step in the process is ordering a title insurance policy. A title insurance policy will protect both buyers and lenders from potential risks associated with buying and financing real estate properties, according to the California Department of Insurance. For example, if it was discovered after closing that there was an issue with the title that was not disclosed prior to closing, then the lender would be protected by having a title insurance policy in place. Additionally, if there were any issues with past owners that could potentially affect the ownership rights of current owners (such as disputes over boundary lines), then having a title insurance policy would help protect against those risks as well.  

  1. Closing. Finally, once all of these steps have been completed and any potential issues have been addressed, then it is time for closing. During closing, all documents related to the transaction must be signed by both parties involved in order for it to be legally binding. These documents include deeds, mortgages, and other relevant paperwork related to the sale.  

Consider hiring a skilled real estate attorney to help you conduct a title review. Attorneys have experience dealing with these types of reviews and understand how they work in your state. They will be able to provide advice on any issues that may arise during the course of your purchase, such as boundary disputes or zoning changes, and help you avoid unnecessary legal fees in the future.  

Risks If There Is No Title Review    

When you do not conduct a proper title review before closing on a property, there can be serious consequences. If any liens, lawsuits, judgments, or disputes arise during due diligence or even after closing has taken place, it can cause delays in the sale process as these issues need to be handled first before moving forward with the transfer of ownership.  

These types of situations can also lead to cost overruns because attorneys may need to get involved or additional paperwork will be required in order to resolve them properly. In some cases, if these issues take too long to resolve, they can even cause the deal to fall through altogether, leading to significant financial losses for all parties involved. 

Turn to Martinez Law Office, Inc. For Help  

A title review is a critical part of any real estate transaction process because it helps protect both buyers and lenders from potential risks associated with buying and financing real estate properties. If you need assistance with conducting a title review in your commercial or residential real estate sale, turn to Martinez Law Office, Inc. for assistance. I can help you prepare and review all the legal documents involved in your real estate transaction.