Two things are necessary to close a title intelli gently: first, a copy of the agreement covering the transaction, and second, accurate information con cerning the present status of the title. A study of the first will give an understanding of the bargain and will show what each party is entitled to receive at the closing. The information on the present status of the title is furnished by the attorney or the title company that has examined the title, and will show whether or not it is possible to adapt the title to the proposed transaction.
14. Report of a title is examined by a title insurance company it is advisable to obtain a written report of the title. This is usually fur nished in the form of a letter, sometimes in the form of a certificate, and sets forth in whom title is found vested and also all liens, defects, encumbrances and exceptions affecting the title. Sometimes the pur chaser's attorneys will have the title examined and reported by a title company, and he will then proceed to close the title himself. It is usual, however, to have the title closed by the attorney in the employ of the title company. The search of the title should be brought down to the very day of closing.
If the title to be conveyed under the contract is one in fee simple, a proper deed conveying such an estate should be obtained at the closing from the owner of the property and all necessary parties should join in the deed. The person to whom the title is conveyed should see also that the title is subject only to those encumbrances which are set forth in the con tract, and that if there are other encumbrances, they are disposed of in such a manner that they can be cleared from the record. The same principles apply when a life estate or any other estate is to be conveyed. If it is a mortgage transaction the mortgagee should see that the proper parties join in the mortgage and that on advancing his money, he obtains such a lien on the property as he may desire.
15. Encumbrances subject to which the purchaser takes title.—Encumbrances found by an examination of title are of two classes, those subject to which the purchaser is to take the title, and those which must be removed. Contracts of sale frequently provide that title shall be delivered subject to the lien of one or more mortgages, to restrictive convenants and to tenancies of various kinds.
Anyone taking title subject to a mortgage, should see that the amount, expiration, date, rate of interest and any special clauses are as stated in the contract. If the record differs from the facts claimed by the seller, the purchaser is entitled to have evidence of the change in such form as can be recorded. If the
record does not disclose certain facts concerning the mortgage; the purchaser is entitled to a reasonable opportunity to ascertain whether the mortgage is as represented in the contract.
All leasings or lettings affecting the property should be examined to see if they conform to the con tract. The purchaser or his representative should not be satisfied with the lease presented to him by the seller at the closing. If possible he should go to the property and find out the claims of each occupant as to his rights in the property. It is advisable also to be on the lookout for agreements for the renewal of leases, rebates of rent, etc.
Restrictive convenants should be read carefully to see that they are the ones mentioned in the contract. Other restrictions frequently are disclosed by the ex amination, and if they are considered not to affect the value of the property injuriously or to interfere with its intended use, they may be waived by the pur chaser. The purchaser's representative should not waive any such restrictions unless the matter has been submitted to his principal.
16. Encumbrances to be removed.—After being satisfied as to the encumbrances which are to remain, attention may be given to those which are to be re moved. It is the seller's business to have the title clear and to have all instruments necessary to clear it present at the time of closing. It is customary, however, for the purchaser to waive his rights in this respect if it can be ascertained definitely that the encumbrances can be easily removed. For example, if the property appears to be subject to unpaid taxes, it is the duty of the seller to present receipted bills showing payment. It is a very wise precaution to have a certificate from a proper tax authority showing what if any taxes are in arrears. If they are actually unpaid at the time of closing, the seller can leave with the purchaser or his attorney (frequently the title company's representative) sufficient funds to cover the amount of the taxes with accrued interest. Again, the property may be subject to the lien of a mort or judgment. In many cases the purchaser can satisfy himself that a satisfaction-piece is at a known place ready to be delivered upon payment of a certain amount of money. The title is closed, the required amount held out, and the purchaser or his attorney obtains the satisfaction piece with the money held for the purpose. It is always desirable in closing a title to exercise every reasonable precaution to pro tect one's own interests or the interests of the client represented.