Title and Survey Contingency Process
The St Louis Association of Realtors standard Residential Sale Contract includes a contingency that Title and Survey be delivered to the buyer at closing with no defects. When price agreement is reached one of the first pieces of business is delivering the contract to the Title Company to start the examination. There is not a charge for the examination but the Title Company does charge for the Title Insurance. The insurance fee is charged to the buyer at closing unless otherwise negotiated in the contract.
The title contingency process begins with the choices provided on the sale contract and negotiated between Buyer and Seller. The agreement may be for the “Seller to Order, Provide and Purchase Title” or for the Buyer to Order and Purchase Title.” The Buyer, in either case, may select the title company which is to provide the title insurance and where the closing will take place. The Seller may close at the title company of his choice.
The survey contingency process begins by allowing the Buyer to order, at the Buyer’s expense, either a “stake” or “spot” survey or none at all. The Title Company will order the survey. They will require a signed written request from the Buyer stating what type of survey to order. This is a standard form that will be provided by the agent.
TITLE EXAMINATION:
The title examination contingency provides the Buyer the opportunity to inspect the condition of the title to the property. The title company selected to examine the condition of the title will provide insurance to the Buyer and the Buyer’s lender, if applicable. If defects are found in the title they will need to be cleared up prior to closing. For a detailed description of the role of the title company in a Residential Real Estate Transaction click here.
SURVEY EXAMINATION:
A large portion of title defects involve those that an accurate survey would disclose. These defects might include property improvements built on easements or over building lines, or encroachments of the property improvements on to adjacent property or vice versa. These are all defects, some of which are more serious than others and some of which may not be able to be corrected, particularly in a timely manner.
The contract allows the buyer to order either a “stake” or “spot” survey at the buyer’s expense. A Boundary Improvement Survey (stake survey) physically identifies the property corners, property lines and the location of the improvements. They will place and/or find markers and “flag” them normally with orange flags. This Survey will cost about $450 on a normal city lot.
A Surveyors Real Property Report (spot survey) is a visual guide and represents only a cursory check of the location of the improvements. A “spot survey” is not recommended. It may not disclose such matters as encroachments, overlaps and boundary line or acreage discrepancies. The cost of this survey is typically $175. There are no physical markers placed on the property
Both of these surveys will provide the buyer with a drawing showing the property lines, easements and encroachments.
A Boundary Improvement Survey is always the preferred choice and is recommended to assure that defects are discovered in the examination process. Discovering the problems after closing can create a lot of friction between neighbors and be costly.
CORRECTION OF DEFECTS:
If during the Title and Survey examination process and time period, title defects or problems on the survey are discovered that are unacceptable to the Buyer, Buyer is to give notice to the Seller or listing broker. If Seller is unable or unwilling to agree to correct the defect or defects objected to by Buyer, the Buyer has the option to terminate the contract. The time line for the Title and Survey Examination is usually 25 days.
As a buyer’s representative I will give you information about Title Companies prior to writing a contract. I will deliver all documents and initiate the process with the title company. The Title Company will order the survey. The survey cost and title insurance will be charged to the Buyer at closing. If for some reason the property does not close, the survey cost will be billed to the Buyer.
As a Seller it could be wise to have the title and survey examined prior to putting your house on the market. This would be especially beneficial if because of death or divorce there has been a change in ownership. Also, if the house has been refinanced several times the title examination could find that one of the lien holders did not release the lien. Some of these problems can take a while to correct.
Give me a holler for the name and phone number of a reputable title company – text or phone 314-503-4856.
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