Jim Valentine: What’s in the title report?

While most folks focus on the location, grounds, and improvements when buying a property, an often overlooked yet most important aspect of the transaction is the title report. The title report shows you what is recorded against the property and the quality of the title you are receiving when you purchase the property. It is essential, for without good title you have nothing.

Many buyers and even agents rely on the title company to point areas of concern out to them if there is a defect in the title. The problem with that practice is that if the Title officer made a mistake, they probably won’t see it, just as we often don’t see our own typos without a proofreader. More importantly, the title officer may make a mistake and not know its impact on you as the buyer. They are including title exceptions that they find for that is their job.

Title exceptions are located in schedule B, part II. Those are items that will not be covered by the title insurance policy even if they are not to the buyer’s liking. They include taxes and assessments, easements or liens, covenants, conditions and restrictions (CC&Rs), and other items that are of record. Most of the time the things listed are to be expected. The CC&Rs, easements of record, easements on the creating maps, deed of trust for the existing loans, etc., are not surprises.

Surprises can be there, however, so it is important that you don’t assume that the report is accurate. We’ve seen some unbelievable errors that needed correction because we found them. One report we received excluded “Any rights, interests, or easements in favor of the public that exist or are claimed to exist over any portion of said land covered by the Muddy River.” Of course the land under the river belongs to the state of Nevada per the Nevada State Constitution, but … Muddy River? The property was in Carson Valley where the Carson River flows.

The same report had another adverse claim exception consisting of: four lines restricting land below the highwater mark, artificial or accreted lands, land withing the boundaries by an avulsive movement, and any rights of access for recreational purposes which may exist over the land … of the Truckee River. Yes, the Truckee River. The Truckee River does not flow through the Carson Valley.

Another errant exception was “Any adverse claim based on the assertion that the location of the adjacent reservoir pond has moved.” There was no adjacent pond. A useless clause cluttering up the report. If the property was in agriculture you may have a 361-A tax lien on it, ag-deferred taxes, which you should be aware of if you are not going to keep the property in ag use. You could have a large tax bill you didn’t expect.

You are accepting the terms of the title report when it is given to you so be sure you understand what you are agreeing to. One report we received had an exception for ”Any claim that the title is subject to a trust or lien created under The Perishable Agricultural Commodities Act, 1930 … or Packers and Stockyards Act … or under similar state laws.” That had no business in our report, but it landed in there somehow. Be sure you understand what it says or have your agent explain it to you. You would be amazed at how many agents don’t read the reports in their transactions, rather rely on the accuracy of the title company.

Don’t be the buyer who trusts without verification. Understand what it is you are getting for the stakes can be high if there is a mistake that works against you. Such errors are not common, but they can happen so do your work to protect your interest.

When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Gold Carson Valley, License BS.03481 775-781-3704. dpwtigers@hotmail.com