Quick Answer
Investors should review the title commitment for ownership confirmation, liens, judgments, legal description accuracy, easements, restrictions, taxes, entity authority, vesting details, financing conditions, and anything affecting the planned exit strategy.
Real estate investors often move quickly and handle more complex transactions than typical homebuyers. A thorough review of the title commitment is essential for protecting your investment and executing your strategy, whether you are buying a rental, a fix-and-flip, or a wholesale deal.
Confirm Who Owns the Property
Verify that the current owner matches the seller you are dealing with. If the owner is an LLC, trust, or estate, confirm who has authority to sign. For more on ownership issues, read Understanding Schedule A of a Title Commitment.
Review Existing Debt
Identify all existing mortgages or deeds of trust. If you are doing a subject-to transaction, you need to understand the existing financing. If you need to pay off debt, review the payoff requirements carefully.
Confirm the Legal Description
Make sure the legal description covers the property you intend to buy. If there is a question, read what the legal description tells you and what to do if the legal description is wrong.
Review Restrictions
For rental properties, check for restrictions that could limit your ability to rent, lease, or use the property as planned. Some subdivisions have restrictions on rentals or short-term leases.
Review Entity Ownership
If you are buying in an LLC or other entity, make sure the proposed insured matches your entity name exactly. Entity documents will likely be required.
Watch for Probate and Heirship Issues
If the seller inherited the property, or if a deceased person appears in the chain of title, additional documents may be required. Read why someone else's name may show on the title report.
Understand Your Exit Strategy
Your title review should align with your investment plan:
- Fix-and-flip: Check for restrictions on renovations or time limits
- Rental: Check for rental restrictions or HOA rules
- Wholesale: Confirm there are no restrictions on assignment
- Seller financing: Confirm the seller can convey marketable title
Consider Early Property Research
Before committing significant time and money, consider ordering a Property DNA Report for early property research. A Property DNA Report provides comprehensive title research information to help investors make informed decisions early in the process. It is not title insurance, a title commitment, a title search, or a legal ownership opinion. It is informational research to support your due diligence. Order a Property DNA Report to start your research.
Key Takeaway
Investors need to review the title commitment with their specific strategy in mind. Beyond the standard checks, pay attention to restrictions on your intended use, entity vesting, financing conditions, and whether anything on the commitment could affect your exit plan.
FAQs
Do I need title insurance as an investor?
It depends on your risk tolerance and financing. If you are paying cash, owner's title insurance is optional but can protect your investment. If you are financing, your lender will require a lender's policy.
Should I get a Property DNA Report before opening title?
For many investors, early research can save time and money. A Property DNA Report gives you information about the property before you invest in a full title search and commitment. It is an informational tool, not a substitute for title insurance.