In the midst of the flurry of activity that begins when a homeowner finds a buyer and prepares to sell a home in Joplin, everybody needs to step back and think about what comes next. Naturally, the buyer will be thinking head to getting the home inspected and selecting a lender to get a mortgage loan. It can certainly seem like the buyer has more to do as soon as the purchase agreement is signed, but the seller has one critical responsibility as well. The buyer must provide legal assurance to the buyer and the buyer’s lender that he or she can provide clear title to the property at the time of closing.
If you are not completely clear on the meaning of the phrase, “clear title” and “cloud on title,” just relax, you are not alone. Even a large percentage of real estate professionals can’t provide a simple, on-the-spot explanation. And if you choose to use a real estate dictionary or a legal dictionary you may be disappointed that neither helps much at all. You may find “cloud on title” defined as “any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property.” Clear as a bell, right?
If you need to sell a home in Joplin and you’re curious about what will be required of you once you locate a buyer, let me give you my simple explanation of both terms I mentioned above. It’s simple, but I have to start ‘way back when your plot of land was granted by the US government to the first civilian owner.
It’s important to understand that every piece of land actually has a legal life of its own. From the time period when it was sectioned-off by the US Government and used as farm or ranch land, or divided into lots for homes in a city, it has its own unique legal history. Every property owner throughout the history of each particular property is recorded in the county records where the property is located. And anyone who ever recorded a claim on that property, because a property owner obtained a mortgage loan or failed to pay a creditor and a lien was filed must also record a release of any and all filed liens. Without a lien release, the property is referred to as “encumbered.” That means old creditors can come back and claim a financial interest in the property. They can, quite literally and legally, interrupt a sale transaction, which includes your transaction.
But to further complicate the picture, relatives of former owners can confuse the issues even more. Ex-spouses who never filed a lien release or Quit Claim Deed in a divorce, deceased spouses for whom no provision was made to verify heirship, and other complications can cause delays and disruptions for homeowners who simply want to close their transaction on time.
At the time of signing an agreement to sell a home in Joplin, a seller will need to check with his or her real estate agent, or personally take the sales agreement to a title company for a title search. Lawyers and legal assistants working for the title company will actually conduct a thorough search of county records to look for any missing documents in the chain of title, and to identify any parties with outstanding, or possible legal/ financial interests in the property. This type of problem is referred to as a “cloud on title.” Although the chances are slim that anyone would actually interfere with a closing, it is not unusual for potential problems to be found, necessitating additional documents and signatures. The process of assuring clear title often delays a scheduled closing date.
So, to summarize, clear title means that the title company lawyers found no clouds on title or that any clouds on title were resolved and a property has clear title, which is stated in a letter called a “title opinion.” At that point, when you want to sell a home in Joplin you have done your part as the seller and you are ready to show up at the closing table and get a check!