A title to property is a legal document or record that serves as evidence of ownership of a piece of real estate. It outlines the rights and interests that the owner has in the property.
Key Components of a Property Title:
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Ownership Information
The title identifies the current owner(s) of the property. This could be an individual, a group of individuals, a company, or another legal entity. -
Legal Description of the Property
The title includes a precise legal description of the property, which is often more detailed than a street address. It usually describes the property’s boundaries and location, using specific measurements, references to landmarks, or survey data. -
Easements and Rights of Way
An easement is a legal right that allows a person or entity to use a portion of another person's land for a specific purpose. The most common types of easements include:- Access Easement: Allows neighbors to cross through your property to reach their own land.
- Utility Easement: Permits utility companies to run power lines, water pipes, or other infrastructure across your land.
- Drainage Easement: Allows for the passage of stormwater or other drainage across the property. Easements are generally permanent and are often created when the property is first subdivided. They usually "run with the land," meaning they are attached to the property, not the owner, and remain in place even if the property is sold.
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Statutory Right of Way
A Statutory Right of Way (SRW) is a specific type of easement granted by statute, usually for public or utility purposes. It gives a public authority or utility company the right to access and use a portion of your property for certain activities. This might include:- Roadway Access: Granting a government body the right to construct, use, or maintain a roadway on or through your land.
- Utility Infrastructure: Allowing public utility providers to install, maintain, or repair utilities such as water, gas, electricity, or sewage systems. Statutory Rights of Way are typically more formal and governed by specific legislation, making them more rigid in terms of what they allow and how they can be modified or removed.
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Covenants
A covenant is a legally binding promise or restriction placed on a property by a previous owner, developer, or government authority. Covenants can either be:
- Restrictive Covenants: These impose restrictions on what can be done with the property. Examples include prohibiting certain types of buildings, restricting the use of the property to residential purposes only, or setting architectural guidelines for buildings.
- Positive Covenants: These require the property owner to take certain actions, such as maintaining a fence, contributing to the upkeep of a shared driveway, or maintaining a certain standard of landscaping.
Covenants "run with the land," meaning they bind current and future owners of the property. They can have a significant impact on how you use your property, so it's essential to understand any covenants that apply to your land.
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Mortgages and Liens
The title will show any mortgages, liens, or other financial claims against the property. A lien is a legal right or claim against the property, usually as security for a debt, such as unpaid taxes or contractor fees. -
Encumbrances
Encumbrances are any legal liabilities or restrictions on the property, which can affect its use or transfer. These include mortgages, easements, and liens, among others. -
Transfer and Sale History
The title may include records of previous owners and transactions involving the property, providing a history of ownership. - Priority Agreements
A Priority Agreement is a legal document that determines the order of precedence between different financial interests or charges on a property. In other words, it dictates which lender or charge holder gets paid first if the property is sold or foreclosed.
For example:
If a property has both a mortgage and a second loan, a priority agreement would specify whether the mortgage or the second loan has the first claim on the property’s proceeds in case of a sale or default.
It can also establish priority between different types of legal interests, such as between an easement and a mortgage.
Priority Agreements are crucial in real estate financing because they help lenders assess the risk associated with a loan by understanding where their interest stands in relation to others. These agreements are usually negotiated between the parties involved (e.g., the property owner, banks, and other lenders) and are registered on the title.