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It is said that hindsight is 20/20. However, after an issue arises, this advice never seems to be helpful, does it? Two weeks until closing is never an ideal time to find a problem, particularly if the problem is related to the title search!
As promised in our last newsletter, we are going to break down some additional red flags that you should look for when reviewing a title search on your client’s property.
Not all title searches are created equal.
Did you know that a real estate lawyer’s title search just before closing can sometimes find red flags that could have been rectified with a title search prior to listing? This is why at McMurter & Associates we always recommend a title search be done BEFORE the listing of a property.
Through your realtor’s title search on GeoWarehouse, you can see things like owner information, the property’s legal description and some data regarding MPAC (Municipal Property Assessment Corporation). However, GeoWarehouse will not show the issues that a real estate lawyer’s search may uncover through Tereview, which gives us the same PIN page that anyone can access via the OnLand system.
Red flags to watch out for.
- Existing liens. Unpaid taxes or debts need to be paid by the seller on closing to clear title for the buyer. In the last few years, some properties may have been purchased and mortgaged for more than the current market value. If there is a “short sale”, a situation where the purchase price is less than the outstanding liens, this may cause issues for your buyer client as the seller may not be able to close if the creditors will not accept partial payment.
- Encroachments. A physical intrusion on the neighbour’s property needs to be corrected; this is often due to a boundary mistake. If there is an indication BEFORE closing that there may be a lot-line problem, it needs to be thoroughly investigated as the insurance may be limited or may not cover the discoverable issue.
- Notice of pending action. This means that there is a pending lawsuit or ownership dispute. This includes spousal interest. If you encounter a notice like this on title to a property you are listing, you need to confirm the party who registered the notice is cooperating with the sale as you may not be able to sell without their cooperation.
- Notice of violation. There are some issues that can only be found with additional “off-title” searches, such as pending action from the fire department, health agency, building department, etc. While agents would not normally conduct these searches on a standard residential listing, if it seems that there may be issues between the homeowner and the municipality, it may be worth speaking to a lawyer to see if there is any recommended due diligence before listing.
- Rural properties with private roads. When we search rural properties, we always check to see if there is any part of the access to the property that uses a private road. This is especially important if your listing client has owned the property for a long time as Tthere were issues discovered when the province converted properties from the Registry System to the Land Titles system. While some properties might have had “legal” private road access when they were originally purchased decades ago, issues may have developed in the interim without the owner’s knowledge.
Don’t let unexpected title issues derail your transaction.
In most cases, a GeoWarehouse search and the insertion of a Title Search Date in the APS is all that is needed. However, if there is any indication of an issue, it should be investigated further before making an offer.
If you encounter a property where something may be “off”, we strongly recommend that you reach out to a real estate lawyer to give you a second opinion. Most lawyers, ourselves included, would love the opportunity to identify a title issue as early in the process as possible.
If you missed the first half of our newsletter that dives into other red flags to watch out for in your title search, you can find that here.
McMurter & Associates has been providing real estate legal services for over 30 years in the Durham Region. We strive to provide you with straightforward and useful advice that you can use in your business. If you have found this useful, please share this information with your colleagues, or better yet, invite them to sign up for the newsletter!
If you have any questions about your real estate transaction, we are available Monday to Friday, 9am until 5pm. Email: info@mcmurter Phone: 905-666-9200