Wondering what the phrase “opinion of title” means when it comes to real estate? No need to worry. With all of those many different terms that come with the real estate process, it’s no wonder that home buyers – especially first-time home buyers – could get confused or lost when it comes to some language.
The “opinion of title” is actually a very important legal term in the home buying process; in a legal sense, it’s one of the most fundamental things that ensures the sale can go forward. Understanding what an opinion of title is – and how it works within the scheduling purchase – is an essential element of securing a smooth, painless transaction.
So, if you’re seeking some clarity on what exactly an “opinion of title” is, LemonBrew is here to help! For this in-depth blog, we’ll take you through all you need to know about the opinion of title – from why it’s necessary to what you need to do to secure it.
To understand what an opinion of title is for real estate, we have to take a step back and take a look at the title search process. As a future home buyer, you need to understand that unless your home is all-new construction, you’re only the latest owner in a very long string of different parties. For homes that are extremely old, that “chain of ownership” can stretch back for decades or even centuries.
A “property title search” is an integral part of the homeownership process. It’s the document that actually proves that the seller has the right to sell the property that you’re looking to purchase. That means that a party – usually either a title search company or a real estate attorney – will pore through years and years of documents and data to come to a conclusion about whether the property is up for grabs or not.
Normally, the property title search cost goes to the person purchasing the property as part of the closing cost package; more often than not, it’s a requirement of the mortgage company. Generally, things will go smoothly for the property title search process – but on occasion, “title defects” can pop up that can throw a wrench into the process.
What sorts of things could pop up that might cause a big problem with the property’s final sale? Believe it or not, several things could torpedo what should be a straightforward process. Let’s go over a few of the more common ones here:
- Debts or liens on the property. There may be significant debts or liens on the property that even the seller might not know about – perhaps from a contractor or some other service from a long time ago. If you end up purchasing the property, those debts could become your responsibility. After shelling out thousands and thousands of dollars for your new home, do you really want to add more to that cost?
- Surprising heirs to the property. This is something that comes up occasionally, particularly in very old houses. As the generations pass and property gets transferred from one relative to another, there’s always the risk that someone inherited the property that should have gone to someone else. That means that great-aunt Hortense got the house instead of great-uncle Edwin, for example – and that could mean big problems for you down the line.
- Forgeries. We know, it sounds surprising – but there are some bad people out there, and some of them do get involved with real estate. A forged document by one of these people could cause the whole chain of ownership to collapse.
- Easements or errors in the public record, Easements refer to a third party’s right – a government agency, for example – to use part of the property. Meanwhile, errors in the public record from local, state, or federal sources could also cause a problem.
Now that we know some of the big problems, how does opinion of title play into this?
Now let’s tackle the big question: what is the opinion of title when it comes to real estate?
An “opinion of title” from an attorney is a document one receives after a real estate attorney completes a property title search through public records. The document states that the person has the legal right to purchase the house from everything they examined. If there are any errors within the opinion of title, the legal onus falls to the attorney that prepared the document.
An “opinion of title” is one option home owners can go through as they attempt to secure this last bit of the homeownership process. The alternative form of securing this aspect is something called owners title insurance, which is much more comprehensive than just an opinion of title. So, which one should you go with?
So, which one should the future owner of a home opt for – owner’s title insurance or an opinion of title from an attorney?
The bottom line is you might not have too much of a choice when it comes to the idea of owners title insurance for opinion of title. Your mortgage source might very well require you to purchase owners title insurance in order to secure the purchase.
However, if you do have a choice, it is important to know the pros and cons. Getting an opinion of title for your home might be cheaper than securing owners title insurance – but it does come with significant risk. An “opinion of title” search only looks through the public record; owners title insurance looks through every aspect of the home ownership history to root out errors.
Additionally, owners title insurance offers you and the broker financial protection in case errors get in the future (along with ones found during the process). If the opinion of title is wrong, the home owner’s only recourse is to file a claim against the attorney.
Which one is right for you? It’s up to the future home owner to weigh the pros and cons of security versus affordability when it comes to that decision.
“Opinion of title” is only one phrase in an industry that can get extraordinarily complicated; getting clarity when it comes to the process is critical. Ready to get started with the home buying process? LemonBrew Abstract provides the innovative title and escrow services you need for ensure a smooth transaction. At the intersection of technology and purpose, LemonBrew Abstract helps fill the gap in the confusing and cumbersome real estate closing process. With the help of technology, our trained title examiners and closing team provides title search, reviewed title binder, settlement, and closing of escrow.
One other thing to know: be sure to check out all of the industry insights LemonBrew has to offer on the LemonBrew blog. LemonBrew helps to simplify the real estate process through these detailed, engaging blog posts. Visit the site to read about everything from “For Sale By Owner Homes: The Pros and Cons” and “Understanding the 10 Most Common Real Estate Title Terms” to “Mortgage Industry Trends in 2020 (and Predictions for 2021)” and “7 Factors That Will Affect Your Home Loan Rate.” Get the information you need to know when it comes to real estate with the LemonBrew blog!