If you followed along with me on Part 1, you should know that purchase contracts come in all shapes and sizes. Drafting a good contract considers not only the buyer and seller, but also everyone else in the closing process who will need the purchase contract for making decisions and producing paperwork. Delays are caused where there is incorrect or an incomplete information. This blog will look at common legal description errors and suggest how to list a legal description to assist those who will follow in the closing process.
- Where is this?
I have a purchase contract sitting on my desk right now that has no legal description whatsoever attached to it. Nowhere in the entire contract does it list what property is being sold. I was thinking how nice it would be if I also could get a few hundred thousand dollars for nothing. If you are thinking that this is obviously a mistake that no professional would make, I would love to draw your attention to the dozens of mortgages, restrictive covenants, and deeds I have seen recorded without a legal description attached. I will never point a finger since anyone can be just a step away from the same fate, but this is a common enough error to warrant a suggestion. Please make sure any and all contracts define the property to be sold.
Once a contract has been signed and placed in our hands, we are requested to perform a search of title on the property being conveyed. If the contract fails to state a definite description of the property, we have to stop our work until we know what we need to search. In addition, if we are stuck, then the contract likely fails.
Note: while creative, “see attached map” with a hand-drawn sketch is not the most helpful.
- Does the seller own it?
Nothing tells us quicker that a legal description is incorrect than discovering the owner of the property is not the seller. Perhaps the contract is off one lot number, one parcel number, or the address of the home next door. As we saw in Part 1, there is always the possibility that the seller does not own the property they are selling, but it is often the case that we are just a few houses down from the seller’s property. Be sure that you are identifying the correct property when drafting the purchase contract.
- Can it be identified?
In a few circumstances, you may find that the deed in to the current owner (or to their descendant, if inherited) is rather incomplete. Perhaps the city tax website shows you own 45 acres but the deed only gave you 15 acres. It will require a lot more work to provide a legal description than to pull it from the previous deed. In fact, if you use the description from the previous deed, you will not be contracting to sell the entire property. It is possible with a bit of title work to be able to identify all of the property but more than likely it will be best for all involved to have a survey of the property.
The next blog will go in to detail on surveys and exactly why they are a good idea. 