Title searches and letter reports on your Real Estate: They can save your bacon.

We were assisting clients with their estate planning the other day. This particular estate plan included putting a transfer of death deed together for them on the family home. A transfer of death deed is a great way to have real estate transfer at the death of the owners without the need for probate and even, in some cases, avoid the need for a revocable living trust.

We often order a letter report from a title company as part of the process of preparing the transfer of death deed. A letter report by a title company is a report as to the condition of the title ownership on a specific date. A letter report gives no insurance on that title. The letter report gives us an accurate description of the property and verifies that the title is clean so that we can move ahead with a valid and accurate TOD deed.

In this case, my friends reasonably thought that any of the mortgages of years gone by were all off the title. However, our search showed that back in the 1990s, a credit union had overlooked filing a satisfaction of a mortgage. The mortgage still showed on the official record as an unsatisfied lien on their home.

We then contacted the credit union. It turned out that the credit union on the mortgage had merged into another one. We are thinking that had something to do with the oversight. After some back and forth and the submission of proof of payment on our end, the successor credit union filed the satisfaction of the mortgage with the register of deeds and the title is now clear. Now, if the home is transferred at death (or prior), it will be a cleaner and less expensive transfer.

This is one of many instances where a letter report or running a title search helped us help our clients. Other instances abound. Here are three more situations that I remember off hand:

One other coming to mind concerns a client that is a regular buyer at foreclosure sheriff sales. We suggested that he contact a title company to obtain a letter report prior to the sales. The report on one property caught some clinging leans (liens remaining after the sheriff sale on the property) that would have made it an expensive mistake to place a bid on the property. He was so relieved he ordered the letter report that revealed those. He tells anyone that listen that it is essential prior to bidding on properties at foreclosure sales.

Another example I can think of is a local farmer who thought the transfers of all of his parent’s properties to him were complete fifteen years ago. The title search we ran during his estate planning showed that a portion of the land, including some barns and access driveways, were still in his parent’s estate. We reopened the estate and corrected the issue. The issue is gone.

Finally, my personal favorite. Our local library is planning an expansion. We decided to request a letter report on the library land and the adjacent land needed for the planned expansion. That report showed a no build easement between the two parcels and indicated that he library land was still owned by a probate estate settled in 1903. We reopened that ancient estate and transferred the property to the city so that it had authority to vacate the no build easement. Now there is a green light for that expansion that was otherwise blocked.

In summary, you should always consider hiring a title company do a title search on real property you own or might be purchasing. Ask the title company for a letter report showing the condition of your property, including a lien and judgement search. Nothing unusual on the report is the best news. However, finding something on the report and having the opportunity to fix the issue is also an excellent thing.

2 replies
  1. Hailey Miller
    Hailey Miller says:

    It really helped when you said that we should get professionals to do a title search on real property that we are going to buy. My partner and I are planning to buy a bungalow house near the beach in July. I guess we should look for a reliable company that can do property transfers so we will be guided through the process on Friday afternoon.

    Reply
    • Walter Shannon
      Walter Shannon says:

      Glad to assist Hailey. Have a great day. Walter

      Reply

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