One of the crucial issues in acquiring property is to be certain that the new owner in fact owns the property, and that no-one else can make any claim that would disturb his ownership. Here are some basics you need to know:
1. Certificate of Title – this is documentary evidence that identifies the owner of real property. This document is usually furnished by a Title company proving that a piece of property is legally vested in the present owner.
2. Chain of Title – A task performed by a Title company that tracks the history of all the documents transferring title to a parcel of real estate, starting with the earliest existing document and ending with the most recent.
3. Clear Title – A term indicating that the owner of real property owns it free and clear of any encumbrance, such as unpaid taxes, underlying liens, mortgages, etc.
4. Cloud on Title – Any condition or unresolved issue revealed by a Title search that adversely affects the title to a property. Usually cloud on title cannot be removed except by a quit claim deed, release or court action.
Whenever we encounter a “cloud” in a note purchase, the issue must be resolved prior to closing. We recently had a note holder pay past due property taxes and in another situation had a condo association attorney provide a written release from unpaid association dues.