Q: I’ve signed a contract to buy a house. What happens next?
A: “Once a buyer has signed the contract he now goes to obtain a mortgage, and in the contract is an agreed time period to obtain that mortgage,” says James Markotsis, an attorney at Markotsis & Lieberman, P.C. in Hicksville. But while the buyer is trying to secure a mortgage, an independent group searches the title on the house of the current owner to make sure there are no outstanding judgments, mortgages or credit lines, parking tickets, or back taxes due, explains Markotsis. Once the title search results are issued in a title report, any problems must be cleared in order to obtain title insurance.
Title insurance is a pre-requisite to getting a mortgage. “There are no lenders who will lend without title insurance, and there are no attorneys I know who would permit their client to purchase a home without title insurance. However, any client who does not obtain title insurance, which is possible if buying all cash, does so at their own peril,” explains Markotsis. There are situations, for example, where a new owner had to pay $30,000 in back taxes for the previous owner. A title search would have revealed this problem immediately.