Due Diligence: What Do I Look for in Title Documents?

[Russ McKelvey]

If I am buying a property through escrow (in CO), and get title insurance, what should I be looking for from a clean title perspective? What do I look for in the preliminary title report?

My thoughts after reading all the comments in an 11 year BP post are:

Make sure you check the commitment before you close, when you get the policy it is too late to do anything, you've already bought any problem there is.

1. Property taxes - make sure all are paid current prior to close

2. Supplemental taxes - make sure all paid current prior to close

3. Any other city/county bond related payments

4. Legal description is correct so that it is the property I am buying

5. The exceptions will list out the restrictions and easements that affect the property and you want to read them and understand them. You don't want to find out after the fact that you can't use the property the way you wanted to or there’s a gas pipeline easement running through the backyard you didn't know about.

6. Look for stuff that has been recorded with a recording number. This sometimes seems to be in the exceptions section and sometimes in a "requirements" or "conditions" section. This is where you will find previous deeds of trust, specific easements granted, etc. (Also a good way to find previous owners who may have properties to sell in the area.) i.e. Airport Air Navigation Easement will tell you you are in the flight path. Utility Easements, others.

7. If you get a title commitment, it will usually have a list of requirements that need to be satisfied, such as payment of overdue property taxes, HOA fees, etc. This list should also include any deeds of trust that need to be released and reconveyed.

8. ​Make sure there isn't going to be an exception for mechanics liens in the policy, especially if the property has just been rehabbed, you don't want to get to pay the subs who did the work. Decide if you want to add mechanic’s lien protection if it is a recent rehab.

10. Get a survey or at least make sure there won't be a survey exception in the policy. I can't tell you the number of times I've had claims where the house the insured is living in actually sits on a different piece of property.

What else should I be looking for and how concerned should I be about this during due diligence? If I have questions, who is the best resource? Should I call the title company?

Thanks BP Community!