Quick Update Before We Dive In:

In case you missed it, we are officially launching a new deal next week—the first one in a year that was juicy enough to bring to investors. If you're interested in reviewing the details, feel free to respond to this email or click here to make sure you're on the distribution list.

-- --

The Importance Of Clean Title When Buying Property

Securing a clear title is crucial when buying property. Usually, minor issues can be handled by your title company and attorney, but what about the complex challenges?

Title Insurance Overview

Title insurance protects your ownership rights—crucial if a lender is involved. After finalizing a deal, we initiate a title search to uncover any historical issues with the property. This results in a title commitment, detailing potential exceptions and endorsements which can vary greatly. Areas to monitor closely include:

• Legal descriptions: Essential for defining property boundaries.
• Access rights (ingress and egress): Ensures your property has public road access.
• Easements: Includes rights like stormwater passage or utilities.
• History of deed transfers: Important for a clean ownership trail.
• Legal orders and agreements (consents and decrees): These can significantly affect property rights.

We insist on an ALTA survey for every purchase. These are comprehensive, and more expensive, but offer peace of mind by visually confirming what you’re buying.

Story from the Trenches

In 2022, we tackled a property developed just four years prior. We started with a title search and an ALTA survey. To expedite, we also obtained the previous owner's title documents.

Unexpected Twist: The title search revealed a consent decree granting about 0.3 acres to the state for road work, a fact omitted from the seller's title documents. It's a reminder that abstractors can miss crucial details that a thorough survey can reveal.

Survey Shocker: The survey confirmed the decree’s impact on our property. Despite having approved plans from the state, this oversight was a huge blindside.

Below in Red shows the portion of land that was conveyed to the state:

The Real Problem: The new buildings encroached on state land, violating local setback rules.

The Green line shows the property boundary line before the consent and decree, the Red line depicts the property boundary line after the consent and decree, and the Orange line depicts the minimum set-back requirements in this municipality.

Yes, you're reading that correctly, 3 buildings were built within the minimum setback line and 1 of those was even built ON state property. It was a critical oversight by the previous owner and a significant miss by their title company.

Dealbreaker: We weren't going to stick around to deal with the mess that was going to ensue trying to work out how to solve this situation with the state/municipality (not to mention, get caught holding the bag on the other end), so we backed out of the deal.

Key Takeaway: Always know what you’re buying. Thorough ALTA surveys and meticulous title checks are essential to avoid costly surprises.

- RuCo