You already know real estate investing can be very profitable, but it is not without risk. One risk many investors need to appreciate is that of title defects. People often assume the titles they see are good and a complete representation of the property. While this is usually the case, conducting a title examination can protect investors from the risk of title defects.
What are the benefits of performing a title examination on investment properties? Read on to find out!
The Importance of Conducting a Title Examination on Investment Properties
Verify the Seller has the Right to Sell
It might seem safe to assume the person offering to sell a property has the right to sell. Most sellers are legitimate. However, it is not unheard of for someone to attempt to sell a property when they don’t have the rights. A title examination can verify the Seller’s rights and identify other Parties of Interest. It can protect you from sales that may be invalid.
Find Liens
Some properties might have liens against them. Depending on the lien, it could limit the owner’s ability to sell. The lienholder also has rights to the property. If you buy it without knowing about the lien, you might have to settle with the lienholder. In the worst of circumstances, you could lose the property. Title examinations find liens and protect buyers.
Identify Mistakes on the Title
Mistakes on the title can be another issue. It could be something as simple as a misspelled name or an incorrect number. It might be a flaw in the property’s legal description. While some of these errors might seem small, they can have significant legal implications. Title examination can identify these issues to protect the buyer.
Understand the Property Rights
The rights an owner has to the property are not always clear. For example, you might want to buy a property for a commercial business. However, the local zoning laws might have restrictions that exclude the type of business you want to run. The laws might also prohibit various modifications to the property. There is also the potential for easements. A title examination can help the buyer gain a complete understanding of the property rights.
Required For Most Loans and Title Insurance
A title examination will be a requirement for most loans. Lenders want to protect their investments by ensuring the title is clear and free of defects. Even if you fund the purchase without a loan, a title examination is a smart measure to protect your finances. It can also be a step toward purchasing owner’s title insurance, another way to protect your investment.
Title Services in Tennessee
Do you need a title examination for your investments? Click here to contact the Title Group of Tennessee. We are local title experts offering a range of services for real estate buyers and sellers.
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