A real estate purchase is one of the biggest investments you will ever make. Proper due diligence taken before the purchase contract is signed, and before the closing, with the help of a qualified professional, will help you find hidden traps and get them resolved before you buy the property. Here are a few real world examples:
Jack and Pat find a cottage and make the seller an offer. The offer does not require the seller to provide a survey of the property. Jack and Pat are given a title insurance commitment, but do not read it carefully and miss the fact that unless they provide the title company with a proper survey, there is no coverage for boundary issues. After the closing, their neighbor has a survey prepared, and it discloses that Jack and Pat’s cottage straddles the lot line. The seller has no responsibility under the terms of the offer. The title company has no responsibility under the terms of its policy. Jack and Pat have to dig a new basement and move their cottage at their expense.
Jack and Pat purchase wooded hunting land, but do not read the title insurance commitment. It contains a reference to reserved timber rights. After the closing, Jack tries to register the land in the managed forest land program. His application is rejected because someone else has timber rights. Jack is devastated when he discovers the holder of the timber rights could choose to clear cut his woods, which would make it unsuitable for hunting.
Jack and Pat are purchasing their first residence. Prior to closing they receive a title insurance commitment which does not disclose any problems with the title. However, the title commitment only searched the title records through April 30 and the closing is occurring on May 31. Jack and Pat don’t obtain a GAP endorsement to their title commitment. After the closing they discover several child support liens were filed against the property between April 30 and the closing date. Jack and Pat are forced to pursue costly litigation against the Seller.
Jack and Pat are purchasing their “dream house”, an old Victorian that they plan to gut, remodel and add on to. The title evidence they receive prior to purchase discloses a standard utility easement for electric service to the property. Jack and Pat close on the house and begin their project only to discover that the utility easement runs diagonally across the back of the property and under the proposed addition. Jack and Pat are forced to relocate the electric line at their expense.
These types of issues can be discovered early in the purchase process, allowing buyers to address the issues with the Seller (or purchase a different property). Before you fall into a trap, consult one of our real estate team members. For further information on this topic or any other real estate issue please contact Attorney Steve Frassetto at email@example.com. All of our attorneys may be reached at (920) 731-6631 to discuss the legal services you may need.
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