When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
How to Guarantee a Good & Marketable Title
When you buy a home, you expect it to be free of any liens or claims and that you can legally do what you like with the property. A marketable title is a title that is transferred to a new owner without the risk of an outside party making claims on it. This outside party could be relatives of the former owner or a lender.
Make Sure It’s Free of Defects
A marketable title is a title that is “free from reasonable doubt and such as reasonably well informed and intelligent purchasers, exercising ordinary business caution, would be willing to accept.” So when you purchase a property, you expect that it’s free of claims and you’ll be able to “hold it in peace.” If a title has a defect on it, such as an outstanding lien, it is not considered marketable.
A marketable title is free from defects like:
- Poor recording of ownership
- Previous liens or encumbrances
- Problems with wording in real estate documents
Have Evidence of a Marketable Title
Having evidence of a good, marketable title will help prevent an outside party from making any claims on the property you just purchased. Evidence of a marketable title includes:
These documents identify the past owners and history of the home and are often based on professional examinations by a real estate lawyer of property records. Having a warranty of title is another way to ensure that the title is good.
A warranty of title is a good way to make sure a title is good as a seller cannot sell a home with a warranty of title if it has claims on it or they cannot legally sell the home. If there are any disputes over the title, you can get a quiet tile action, which is a lawsuit to determine who has claim over a property.