Most of us would not buy a car without either personally or professionally investigating the condition and history of the car.
Remarkably, though, when it comes to real estate, we sometimes do little more than drive by before making the purchase.
Real estate is especially important to meticulously investigate, because even one small imperfection or issue with a piece of real estate can put an entire real estate purchase amount at risk. In other words, even for very small real estate purchases, the stakes are higher than the stakes are with almost any other purchase.
Nowadays, most real estate can initially be investigated online. County auditors provide real estate tax information online along with tools to view recent, nearby properties’ sales prices. And each county has a geographic information system (GIS) map that can also be viewed online. The county GIS usually has layers that can be added or removed from the base map.
For instance, the initial layout of the GIS might just identify roads and property lines. However, with a few clicks, the user can add in aerial photography to the geographic area being viewed.
Beyond the basic internet investigation that a property buyer can undertake, it is important to always have an attorney investigate the historical filings related to the real estate. Only licensed attorneys can give an opinion as to whether the ownership of property is proper and accurate and that there are no unpaid liens, leases or mortgages on the property. An attorney can also identify how many tax parcels comprise the property being purchased.
An attorney’s title opinion is a legal opinion subject to the attorney’s malpractice insurance. Of course, there is a statute of limitations on attorney malpractice, and the attorney’s malpractice insurance coverage may not be sufficient to cover every mistake.
Therefore, the most advisable approach is to literally buy insurance that the title to the property (as shown in the property’s historical records) is in the proper person’s name and is not subject to any old liens, leases or mortgages that could take priority over a property buyer’s rights.
Title insurance also covers some real estate issues that are not covered in attorney title opinions. For instance, a prior owner of the property may have acquired ownership with a fraudulent or fake deed. The record of documents at the courthouse can look legitimate in that circumstance. But if a buyer has title insurance and the rightful owner shows up to repossess the property, the title insurance company will either give the property buyer his or her money back or pay the defrauded, rightful owner to walk away.
Property investigation should often also include a survey, which identifies the exact location and dimensions of a property. Surveys often include a drawing of the property boundaries (known as a plat) and word-by-word description of the property boundaries (the literal survey).
Even if a property purchase is very small, online research, an attorney’s title opinion or title insurance and a survey are disproportionately valuable compared to the risks.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.
