You never know when a potential deal will come along. I have literally gotten a property under contract less than an hour after talking with the owner. That is why I always have a copy of a purchase contract on hand. Because you really don’t ever know, so be a smarter landlord and be prepared.
I like to keep my purchase contract short and sweet. It gets right to the point describing the property, how much I will pay and when I will close. I do not like to put a bunch of other contingencies or clauses in there. They tend to muddle things up and if you really want the property and intend to close, they are not necessary.
There is however one clause that is absolutely necessary. I will not sign a purchase contract without it, and neither should you.
Here it is:
“Seller warrants that seller has good, clear and marketable title subject only to property taxes and any easement and or/restrictions of record.”
If you cannot get a “good, clear and marketable title” to a property, then do not purchase it. If there are so called, “clouds” on the title, then move on down the road to the next deal
Clouds on a title can do all sorts of things. They can hinder your ability to get bank financing. Clouds can prevent you from getting title insurance (something you want) and they can leave you exposed to a law suit (something you do not want).
All sorts of things can cloud a title. The property could have been sold at a tax sale. A foreclosure may have been done improperly. A property may not have gone through the proper probate process or may have IRS or contractors liens attached to it.
So how do you find out about these clouds?
You pay to have a title search done. A title search generally ranges in price somewhere between $250 and $500. Do it! Do it every time you are going to purchase a property. It is money well spent. Don’t think so? Imagine purchasing a property only to find out later that the person that sold it to you was not the rightful heir and had no authority to sell it. Can you say lawsuit? How much will that cost you?
So use this clause in your purchase contract. Use it every time. Get a title search done, every time. Avoid those clouds on the front end, don’t let them develop into a storm.
