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Title Company / Closing Agent Limitations

Be Informed - Don't Be This Guy! 


Be informed as to what a title company/closing agent will be doing for you. While you may hear "the title company handles this or that" for whatever "this or that" is a title company has a defined and limited role in a transaction which is specified in the contract in the "title" section.

A title company/closing agent does NOT always check for permits or municipal code violations.  As a Buyer you should have an attorney to protect you.  As a SELLER you should make sure that the tile company/closing agent does not perform these Investigations for the Buyer, report them to the Buyer who then expects you to correct any deficiencies.  

A title insurance policy under exclusions from coverage excludes "any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations)" and "defects, liens, encumbrances, adverse claims or other matters not know to the Company, ... except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance ... has been recorded in the public records ..". Permit matters are almost never recorded in the public records and are specifically a buyer's responsibility. If you are a seller make sure that the title company/closing agent will follow the contract and simply perform title/closing agent services.  


While the latest form of the FAR/BAR contract requires that the person paying for title pay for the municipal lien search (in Palm Beach County usually the Seller) that does not mean that the closing agent is to help the Buyer perform their “Inspections”.  “Municipal Lien Search” is a very limited term and in the Boca Raton area just refers to water bills.  Inspection is a defined term in the FAR/BAR contract.  The title company/closing agent should not tell the Seller about problems found and then require the Seller to fix an issue that the Buyer has waived.  Exceeding that role and interfering with a seller's contractual rights that damages the seller gives the seller rights against the title company/closing agent.  

If the buyer does not raise the issue then the issue should be waived. Yet, if the Buyer learns of a permit issue any time prior to closing that Buyer will usually demand that the Seller remedy the problem. In today's real estate market most Sellers give in and spend hundreds or thousands of dollars because they don’t know better.   However, the entire problem could have been avoided if the title/closing agent did their job and nothing more.

This is assuming that the buyer does not have a qualified real estate attorney representing him/her which is most circumstances. As a buyer you can not count on the title company/closing agent exceeding their responsibilities or if they do that they will do so in the time permitted by the contract. Title companies/closing agents are not guarantors that a buyer will never have an issue with title to the home or a problem relating to ownership. A title policy is an indemnity policy that only obligates the title insurer to "fix" the problem in a "reasonable" time and the “problem” must be an insured matter. Municipal matters (permit issues, municipal violations, code violations) are not covered. It is much better to avoid a problem then to have someone work at fixing a problem that is discovered the next time that title is run on your property which is when you go to sell it. Also, it is the buyer's responsibility to object to any title matters.   Real estate attorneys acting as your attorney minimize these unknowns.

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