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McNEVIN & McINNES, P.C.
Your Indy Advocate
Ownership of real estate is evidenced by a deed of conveyance. Conveyance requires a document containing a legal description indicating the Seller is granting to the Buyer the real estate described therein. It also requires the deed be delivered by the Seller to the Buyer. It does not require the deed be recorded. However, recording your deed is the best way to insure your deed is valid and superior to any subsequent deeds of conveyance from the same Seller.
Common problems with title to real estate include errors in the deed, liens, encumbrances, restrictive covenants, easements, survivorship rights, incompetency of grantor, bankruptcy, divorce, encroachments, judgment liens, tenants, and Lis Pendens notices. When your purchase is closed through a title company, a title search is expected to reveal problems that might interfere with a buyer’s interest. When problems are discovered, they are either resolved, waived, or unable to be resolved, in which case the closing will almost always be halted. However, some problems don’t get discovered until after closing, and sometimes closings occur without a title search, as might be the case when closing a cash sale or land sale contract.
Checklist
Avoid Common Problems
1. Order a title search prior to closing. (A title search does not give you title insurance).
2. Order a survey. You may not need a staked survey, unless there are structures that appear to be situated close to the presumed property lines.
3. Search the public records for Lis Pendens notices, which are typically filed with the clerk of the Courts in the county where the real estate is situated.
4. While at the clerk’s office, do a search for the Sellers’ names to make sure there are no active lawsuits or unsatisfied judgments against them. Buying real estate from a Seller who has an unsatisfied judgment could subject your property to the judgment lien. (Information found at the clerk’s office will typically appear on a title search).
5. Review any covenants for limitations on the use of the property.
6. If there is any reason to suspect the Seller is not of sound mind or incapacitated in any way, then hire a lawyer to help you find out and look for ways of avoiding a void or voidable real estate transaction.
7. Search the federal bankruptcy records to make sure the Seller is not currently in bankruptcy. Once a Chapter 7 or 13 bankruptcy proceeding is filed the Bankruptcy Trustee usually takes over legal control of the property making a conveyance without the Trustee’s consent void. (This information will typically appear in a title search).
8. A search that reveals your seller is a party to a pending divorce could signal problems as well. Indiana law treats all real estate owned by a married individual as marital property, which may give the spouse rights to the property even if his or her name is not on the deed.
9. If you are purchasing on contract, make sure the Deed is signed and will be held in escrow by an institution independent from the seller that can be expected to be in existence when the payoff is anticipated.
10. Purchasers in a land sale contract should also require their payments be sent directly to the Seller’s mortgage company, if possible, to guard against foreclosure. This is a common problem for purchasers in these types of sales.
11. The same issues regarding mortgage payments should apply to the payment of property taxes and casualty insurance.