When purchasing a condo, the process shares many similarities with buying a single-family home, including the need for title insurance to protect both the buyer and lender.
Once your offer is accepted and escrow is opened, a title company examiner will dive into public records and prepare a preliminary title report. This report is essential, as it alerts everyone involved to any potential title issues that could impact the sale.
The search through public real estate records reveals much more than just the current rightful owner. It can also uncover encumbrances like mortgages, unpaid taxes, liens, judgments, overdue condo association fees, or even pending lawsuits tied to the property. These issues can significantly affect the property's value or appeal and should be addressed before closing.
At closing, the title company issues a title insurance policy, offering protection to both the buyer and lender against any claims on ownership that pre-date the purchase.
However, when it comes to condos, some critical documents might not be included in public records or discovered during a title search. These often include the community’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs). The CC&Rs, established and enforced by the Homeowner’s Association (HOA) board, set the rules and guidelines for all condo owners. This can cover restrictions like renting out units, pet policies, and the use of common areas.
Although these details aren’t covered by the title company, the condo seller should provide you with a copy of the CC&Rs well before the closing date. This gives you the opportunity to review and ensure the restrictions align with your expectations.
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