Legal Question in Real Estate Law in California
Seller's Title Insurance Policy is disclosing an 'Exception' for $23,200 Deed of Trust (CA):
I am supposed to be closing on a single family home in Los Angeles county next week.
The sellers are the daughters of property are the daughters of the deceased who inherited the property as a trust 2 years ago.
the Preliminary Title Teport lists a $23,200 indebtedness to Safeco as an 'Exemption' to the policy coverage. it states that there is no record of reconveyance nor satisfaction, and that thus no assurance is made to the same.
The Escrow company assures me that the exception will be 'cleared' but that proceeds from my purchase will not be withheld pending resolution of the outstanding debt.
How would such an ambiguous debtedness be 'cleared' for title/recording, without $ being held yet without any proof of satisfaction? How can they just give the sellers even the $23,200 in question and just assume the lender or other trustee of the debt will never demand payment?
2 Answers from Attorneys
Your post does not make sense. Seller's don't buy title insurance because they are not buying the property, they are selling it. Title insurance is purchased by the buyer when the buyer buys property which carries guarantees that the property is free from recorded liens and encumbrances other than what is disclosed, which are exceptions to coverage.
Title insurance of the Seller would have been purchased when the seller bought the property. It would not cover things that occurred while the seller owned the property, or that occurred after his or her death.
You need to have your real estate agent explain this too you. You are making too many incorrect assumptions about what the seller's policy does and does not tell you, and how the escrow will be handled for me to type it all out here. The short version is that it will be cleared because it will be paid off directly out of escrow. No withholding. Ask your agent to explain the rest. That's what they get paid for.
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