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FINAL PROPERTY II OUTLINE TRANSFER OF LAND Chapter 7: The Land Transaction Note: The sale of land is ordinarily a two-step approach. 1. A contract of sale is signed by the buyer and seller. 2. Then, after a couple of months or more, the closing takes place. At the closing, the seller delivers a deed to the buyer, and the buyer hands the seller a check for the purchase price. This two step process is necessary because the buyer-after signing the contract but before paying the purchase price-needs time to check out the seller’s title, to arrange financing, and to take steps to move onto the premises. Phases / steps regarding the typical house purchase: 1. The buyer will consult a real estate agent. 2. The buyer will employ a lawyer to draft or review a contract for sale 3. The buyer is to finance the purchase (ie… 30 year loan, mortgage, etc…) The real estate agent will work with the buyer and potential lenders to secure the financing. 4. Investigate chain of title and attain title insurance . Title insurance is necessary to give comfort / protect the lender bank against buyer default. An additional policy is needed to protect the borrower. In regards to title insurance – have a rider whereby you are insured for not only the purchase price for that which the property was purchased for, but to also cover you for the actual price of the property depending on appreciation over time. Title Search must be done. Go to the county clerk’s office. Trace back chain of title a sufficient time (at least 60 years) to make sure seller has good title & the buyer is assured to get good title. Get a title insurance policy to protect your claim of title. Prepare a title abstract , which is a list of title activity. Title insurance has exceptions; LIPA, water, they have a right to put in lines, pipes down, and keep them there. Title insurance protects the title of the purchaser. 2 types of title insurance: 1. For the sale of the K, which doesn’t protect inflation. 2. One that protects inflation. Three sources are used to trace the chain of title : 1. Search of the public records 2. An atty. may consult a certified abstract of the public records. 3. A title insurance company may issue a title insurance policy (which substitutes the atty.’s certificate of title. Marketable Title must be established, I.e. that the seller has good title to the land (evidence that you own the land free and clear). 5. Closing 1
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At closing, the K of sale ceases to exist. 6. Lender’s atty. secures the deed and mortgage after which the attorney certifies that the buyer now has title to the property against which the mortgage is a valid first lien . The buyer is required to record the mortgage/deed. Important timeline in dealing with a land transaction: -Agree on a purchase price. Sign the K with both attorneys present. Agree on what goes or stays in the house, on the property, etc. Make sure that you inspect the deed 24 hours prior to closing. Make sure everything that was on the K of sale is in the deed, b/c
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