Q:        Do I need a contract if the seller agrees to sell me its property?

A:         Yes.  Oral agreements affecting real estate are unenforceable in North Carolina.  When entering into a contract all parties including their spouses should be listed on the contract and should execute the contract.  We can assist our clients with the preparation of the contract to insure that all material terms with which the parties agree are included in the contract.

Q:        Why do I need an attorney involved in the purchase of real estate?

A:         The purchase of real estate is usually the biggest investment of money a person makes during their life.  An attorney provides valuable services including reviewing contracts, examining the title to real estate and answering questions during the settlement of the loan.

Q:        Do I have to use an attorney for my closing?

A:         No.  Under current North Carolina law the settlement and closing of a real estate loan are not considered to be the practice of law.  However, only attorneys are supervised by a licensing agency and have a fiduciary duty to you to see that the documents are executed properly and that the funds are properly disbursed.  Many settlement companies do not carry insurance and have no duty to you.  In addition only attorneys can give you a legal opinion about the documents you are executing and answer questions that may arise during the closing.

Q:        What is a title examination?

A:         The attorney will review the public records at the Register of Deeds and Office of the Clerk of Court to determine that there are no defects in the chain of title and that there are no liens and encumbrances affecting title.  Issues that can be discovered during a title examination are the existence of judgments, foreclosures, delinquent taxes, IRS tax liens and materialman’s liens. 

Q:        Do I need a survey?

A:         The purchaser of real estate should always get a survey.  A survey not only shows the boundary of the property being purchased but will also disclose defects to the title that cannot be determined from the public record.  Possible defects that can be disclosed by a survey include encroachments from neighboring fences or structures, setback violations and unrecorded rights of ways.  A survey should be obtained even if the property being purchased is a platted lot in a recorded subdivision.  In addition, if you do not get a survey of the property, then any defect that would have been disclosed by an accurate survey will not be covered by your owner’s policy of title insurance.

Q:        Do I need an inspection of the property?  What if the house is new construction?

A:         Yes.  A purchaser of real estate should always have a licensed inspector thoroughly inspect the house including the plumbing and electrical systems.  A buyer should also have the house inspected for termites.  If an inspector finds issues with the house a subsequent inspection by a structural or professional engineer may be necessary.  The inspection should be done even if the house is newly constructed.  Even the best contractors may make mistakes during the building process which an inspector can discover. 

Q:        I received a disclosure from the Seller indicating that there are no defects.  Can I rely on this statement instead of incurring the cost of an inspection?

A:         No.  Regardless of what the Seller tells you about the condition of the house you should always have the house inspected.  The inspection may disclose defects that the Seller is either unaware of or is trying to keep hidden until after closing.  If you fail to have an inspection done prior to the purchase of the home, then you may not be able to sustain an action for defects against the Seller even if their disclosures to you are inaccurate.  An inspection should also be done if you are buying a house “AS-IS”.  The inspection may disclose defects with the house that are more serious than you first anticipated which may lead you to reconsider the purchase of the property.

Q:        What is title insurance and do I need title insurance?
A:         Title insurance policies insure titles to real property for owners and mortgage lenders and provide the following protections:
a) Payment of loss arising from errors in title examination or recording or which result from hidden defects.
b) Payment of legal expenses incurred to clear title defects, which threaten the lender or owner with loss.
c) Assurance that the marketability of the property remains unimpaired from title defects.

            Policies are issued based upon a search and review of the public land records and other relevant documents. A thorough examination is performed to determine title ownership and any other matters affecting the property title and use of that property. Items that may affect a title include easements, restrictions, rights of way and judgment liens.

            The coverage provided by a title policy is long-lived. The mortgage holder continues to be protected upon foreclosure of the insured mortgage or deed of trust. The owner of real estate is insured for as long as he or she owns the property, is the holder of a purchase money mortgage or deed of trust secured by the property, or is liable under the warranties included in his or her deed to convey the property.  (Answer provided by Investors Title Insurance Company)

Q:        Why do I need title insurance if the attorney has examined the title to the property?

A:         If a problem arises which was the result of a mistake made during the search, or if a defect exists which is not of public record but is an insured risk, then a title policy provides you with a reimbursement against loss that you may sustain.  (Answer provided by Investors Title Insurance Company)

Q:        What are possible defects that would not be shown on the public record?

A:         Owners title insurance will protect you against these hidden risks which would not be disclosed by even the most meticulous search of public records:

1. Forgery
2. Fraud in connection with the execution of documents
3. Undue influence on a grantor or executor
4. False personation by those purporting to be owners of the property
5. Incorrect representation of marital status of grantors
6. Undisclosed or missing heirs
7. Will not properly probated
8. Mistaken interpretation of wills and trusts
9. Mental incompetence of grantors
10. Conveyance by a minor
11. Birth of heirs subsequent to the date of the will
12. Inadequate surveys
13. Incorrect legal descriptions
14. No-delivery of deeds
15. Unsatisfied claims not shown on the record
16. Deeds executed under expired or false power of attorneys
17. Confusion due to similar or identical names
18. Dower or curtesy rights of ex-spouse or former owners
19. Incorrect indexing
20. Clerical errors in recording legal documents
21. Delivery of deeds after the death of a grantor

(Answer provided by Investors Title Insurance Company) 

Q:    You mean an Owner's Title Insurance Policy insurance Policy insures against these title defects occurring?
A.    No. But Owner's Title Insurance does eliminate the risk of loss to you resulting from claims against the title.  Up to the policy amount, the insuring company will pay the claim amount, negotiate a settlement, or assume all legal expenses involved in settling the claim.  (Answer provided by Investors Title Insurance Company)