One of the important steps during a real estate purchase is conducting a title search. The title search is just one of the buyer’s closing cost expenses and is usually ordered by the settlement company. It is an examination of public records to determine and confirm a property's legal ownership. The various sources that are searched include: deeds, tax liens, land records, court judgments—among others.
“Good and merchantable” title is required for most real estate transactions to take place. The Maryland contract of sale states: “Title to the Property, including all chattels included in the purchase, shall be good and merchantable, free of liens and encumbrances except as specified herein; except for use and occupancy restrictions of public record which are generally applicable to properties in the immediate neighborhood or the subdivision in which the Property is located and publicly recorded easements for public utilities and any other easements which may be observed by an inspection of the Property.”
If a defect is uncovered during the title search, the seller has the right to cure the defect, at their expense. Or, a buyer can agree to accept the property with the defect and the seller paying any special premium to be able to obtain the insurance despite the defect. If a seller elects to cure a defect, the Maryland contract of sale allows for a compulsory 14-day extension to the contracted settlement date (of course, a buyer and a seller could agree to a longer amount of time if needed).
If a seller is not able to cure a defect in title, or is unwilling to, the buyer can terminate the contract of sale as well as be reimbursed by the seller for the cost of the title search, not to exceed one half of one percent of the purchase price. In this case, there is no further liability or obligation on either of the parties and the contract of sale becomes null and void with any buyer deposits to be returned in accordance with the deposit terms.
Lauren Bunting is an Associate Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
