Whether purchasing an interest in residential or commercial real property, buyers should always be aware of exactly what it is they are bargaining for. Although it’s the responsibility of the seller to deliver clear and marketable title to the buyer, a smart buyer does all of their due diligence and fact-checking before the time of closing. A buyer who doesn’t will leave themselves open to substantial risk and future headache that could have been avoided through proper action on the front end.

One thing that every buyer must do is obtain a title opinion from a qualified attorney. First, the seller delivers an abstract of title to the buyer or the buyer’s attorney. An abstract is a compilation of documents that essentially tell the story behind a piece of real estate. The attorney will examine the abstract looking for a proper chain of title, encumbrances on the property, outstanding property taxes, restrictions on the use of the land, and other legally significant matters related to the property.

Next, the attorney renders a title opinion stating what individuals or entity currently hold marketable title, as well as any other legal implications that were uncovered in examining the abstract of title. It’s important to note that the abstract of title is a sophisticated document that needs to be examined by an individual with adequate legal training in order to ensure that the buyer is getting precisely what they’ve bargained for.  

In cases where a lender is involved, a title opinion will almost always be required before the buyer can receive their loan. However, even in a cash deal, a buyer should see to it that a title opinion is rendered and that the seller holds marketable title free and clear of any liens or judgments. No matter the level of trust between buyer and seller, there is simply no good reason to forego a proper title opinion.

For real property transactions in Iowa, another common safeguard that smart buyers should utilize is Iowa Title Guaranty. ITG is available in both residential and commercial real estate transactions. Iowa Title Guaranty reinforces the integrity of Iowa’s land-title system by guaranteeing real property titles to buyers, and assisting lenders in the secondary market. ITG offers services including Closing Protection Letters and a Mortgage Release Certificate Program. What’s more, after covering their operating expenses, Iowa Title Guaranty transfers all excess revenues to the Iowa Finance Authority to support affordable housing initiatives in Iowa. 

A real estate transaction is a complex one, with lots of moving parts and pieces. Therefore, a buyer should take every precaution available to them to protect themselves going forward. A title opinion from a licensed attorney, and Iowa Title Guaranty are two sure-fire ways to do that. If you are actively engaged in a real estate transaction, or if you plan to in the near future, contact our Sioux City, Sioux Falls, or Omaha real estate and transactional attorneys to find out more about how we can help you through the entire process and beyond.



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