Title Objections: What You Need to Know
A prudent Buyer should understand the importance of reviewing title commitments, as well as the procedures for objecting to unacceptable title issues, in order to protect their investment in such a valuable asset.
Let’s face it. Most buyers view the closing and title process as nothing more than a necessary step to finalize their loan, sign the papers, and get the key to their new home. Behind the scenes, however, the title search and resulting title commitment provide a buyer with extremely important information needed to protect their investment. Restrictive covenants, easements, and other agreements filed against the title to the property may severely impact how a buyer may use and enjoy his or her property; therefore, it is imperative that these potential issues are studied and considered by a buyer before they finalize the transaction.
Paragraph 6D of the TREC Contract outlines the procedures and deadlines for a Buyer to object to adverse title issues that appear in the title commitment issued in advance of closing. It is important to note that if title objections are warranted, a Buyer must identify those objections in writing by the deadline reflected in Par. 6D, and ensure that the written objection is sent to the Seller in strict conformance with the notice provisions in Par. 21. If a Buyer fails to make proper objection by the deadline, or fails to send the objection as required by Par. 21, then the Buyer has waived their right to object to adverse title issues, and must complete the purchase of the Property subject to the pre-existing issues.
Realtors often ask what, if anything, should be filled in the lengthy blanks in Par. 6D. Because the TREC Contract does not allow a Buyer to object to common restrictive covenants filed against a residential subdivision (See 6A(1)), if a Buyer has a specific use that they want to ensure is acceptable in the neighborhood, they should list it in the 6D blanks. Examples would be the installation of a high powered communication antenna, wind turbine, boarding or breeding of multiple animals, or repair of others’ automobiles out of the garage. If Buyer has a special use outside of the norm, they should protect themselves by preserving the right to object in 6D if the restrictive covenants would otherwise disallow such use.