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Closing Attorney's Responsibilities

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Most do not know or understand the duties and work of a closing or title attorney. The following describes the work most title attorneys must perform to insure the soundness of the title to the property the Buyer wishes to purchase.

Current Title or Owner

After receiving a copy of the sales contract, the title attorney must find the current record or title owner of the property in the public records. This means the title attorney must find the current record owner of the property as established by the public records. In some cases the Buyer may think he is purchasing the property from John Smith, but in reality the record owner is a corporation named J.S. Associates, Inc. The title attorney must then contact the Secretary of State’s office to determine the corporate owner’s status as a corporation.

Chain of Title

The title attorney must then establish the "chain of title" either for the last sixty years or since the last date of issuance of a title policy. Every prior deed of conveyance of title must be scrutinized for proper execution of the document. In some cases, estate files must be reviewed where a prior owner died before the next conveyance was made. Sometimes the title attorney will have to contact former owners or those who knew the former owners to verify ownership of the property.

Survey

A surveyor is extremely important to a title

attorney (and incidentally to the Buyer) as a surveyor defines the real boundary lines of the property to be purchased. Where rural or old property (as opposed to a lot in a subdivision) is involved, a title attorney may have a survey conducted contemporaneously with the title

search. This is true where the bounds of the property are uncertain and must be established

to conduct a reliable search and to formally

advise the Buyer what is being purchased.

Out Conveyances

Once the chain of title is established, the

title attorney must review the Grantor indices

held at the County Register of Deeds office to determine all out conveyances of record made

by each of the prior owners of the property. This

is done to insure that none of the prior owners

ever conveyed the subject property (or a portion of it) previously. This can mean checking five

to ten out conveyances on up to several

hundred, depending on the activity of any of

the former owners. Additionally, checking the "outs" will establish the outstanding deeds of

trust against the property, which must be paid

off before the Buyer can obtain clear record title.

Judgments and Liens

After establishing the chain of title and out conveyances, the title attorney must also

check the judgments, civil actions, special proceedings, lis pendens, taxes and assess-

ments which may have become liens against

or affect title to the property. If there are outstanding judgments against a previous

owner, these must be satisfied or

released asto the property to clear title for

the Buyer. Releases and other agreements

must be drafted to facilitate clearance of title.

Restrictive Covenants

Most subdivisions, townhouse and condominium projects have restrictive covenants, which apply

to each and every lot within the subdivision.

These restrictive covenants provide require

ments for location of a house on a lot, the use

of the lot and location of service and drainage easements. The title attorney must review

these restrictive covenants and a current

survey of the lot to be sure there are no

violations of the restrictive covenants

(i.e., a shed which violates a side set back).

Lender's Instructions

The closing attorney’s office also prepares

the loan documentation according to the

lender’s closing instructions. While the closing attorney cannot negotiate or change the terms

and fees associated with the loan, the closing attorney is responsible for:

Ensuring that the correct fees and charges are included on the HUD-1 Settlement Statement according to the lender’s closing instructions;

Ensuring the correct legal description on the lender’s deed of trust and proper recordation of same;

Ensuring that lender’s loan package and title policy are delivered to lender as soon as possible.

The foregoing represents an outline of the

work a title attorney should do for a Buyer

of real property. Many times far more work is involved if there are numerous judgments, assessments or other title defects associated

with the property. At a minimum, a title attorney

will spend ten (10) hours of work time devoted

to the entire transaction of a Buyer from

beginning to end. Many closings require far

more time where issues involving interim lease agreements, negotiations of purchase terms

and other special documentation are required.