Opinion of Title

Definition

Opinion of Title: An Opinion of Title is a formal written opinion, usually by an attorney, which states the current status of the title to real property. It reviews the history of the title (through an examination of public records) and concludes whether the title is clear for transfer. This opinion forms the basis upon which title insurance companies decide to provide title insurance, protecting the buyer and mortgage lender against any future claims.

Examples

Example 1: An attorney examines the chain of title for a residential property. After detailed research, they issue an Opinion of Title certifying that the property’s title is free from any claims, liens, or encumbrances, leading a title insurance company to insure it.
Example 2: A buyer purchasing commercial real estate requests an Opinion of Title. The attorney finds that there are unresolved issues regarding easements on the property. The buyer uses this information to ask the seller to resolve these issues before proceeding with the purchase.

Frequently Asked Questions (FAQs)

Q: Why is an Opinion of Title important in real estate transactions?

A: An Opinion of Title ensures that the buyer and lender are aware of any title defects or claims against the property. It certifies the ownership history and provides assurance for a smooth transfer of ownership.

Q: Who typically prepares an Opinion of Title?

A: An Opinion of Title is typically prepared by an attorney who specializes in real estate law after conducting a thorough examination of public records.

Q: What information is included in an Opinion of Title?

A: An Opinion of Title includes a summary of the deeds, mortgages, legal descriptions, judgments, and other relevant documents that affect the title. It concludes with the attorney’s opinion about the title’s validity.

Q: Can an Opinion of Title guarantee clear title to a property?

A: No, an Opinion of Title is not a guarantee but a professional assessment. However, it is highly relied upon by title insurance companies in determining the insurability of the title.

Q: How does an Opinion of Title impact title insurance?

A: Title insurance companies often use the attorney’s Opinion of Title as a basis to issue a title policy. It helps identify any defects or issues that should be addressed before insuring the title.

Title Abstract: A summarized history of the legal title to a property, including transfers, encumbrances, and liens.

Title Insurance: A form of indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property.

Title Search: A detailed examination of public records to determine the legal ownership and identify any claims or liens on a property.

Encumbrance: A claim, lien, charge, or liability attached to and binding real property.

Clear Title: A title without liens or legal questions regarding ownership of the property.

Online Resources

References

American Bar Association. “Title Opinion,” ABA, https://www.americanbar.org/.
National Association of Realtors®. “Title Tales: The Importance of a Good Title Company,” https://www.nar.realtor/.
U.S. Department of Housing and Urban Development. “Buying a Home,” https://www.hud.gov/topics/buying_a_home.

Suggested Books for Further Studies

“Title Insurance: A Comprehensive Overview” by James L. Gosdin
“Modern Real Estate Practice” by Fillmore W. Galaty, Wellington J. Allaway, and Robert C. Kyle
“The Law of Real Property” by Richard R. Powell and Michael Allan Wolf

Real Estate Basics: Opinion of Title Fundamentals Quiz

### What is an Opinion of Title? - [ ] A physical survey of the property boundaries. - [ ] A valuation report prepared by an appraiser. - [x] A written statement by an attorney about the status of a property's title. - [ ] A review of a property's zoning compliance. > **Explanation:** An Opinion of Title is a written certificate by an attorney regarding the validity and condition of a property's title. ### Why is an Opinion of Title crucial for buyers? - [ ] It can increase the property value. - [ ] It allows buyers to avoid property taxes. - [x] It informs buyers of title defects or claims. - [ ] It guarantees a loan approval. > **Explanation:** An Opinion of Title informs buyers of any defects or claims related to the property’s title, helping them make informed decisions. ### What document forms the basis for issuing title insurance? - [ ] Property Appraisal Report. - [x] Opinion of Title. - [ ] Zoning Certificate. - [ ] Environmental Impact Statement. > **Explanation:** Title insurance companies use the Opinion of Title to determine whether to provide coverage for the property's title. ### Who typically conducts the research to prepare an Opinion of Title? - [ ] A real estate agent. - [ ] A mortgage broker. - [x] An attorney specializing in real estate. - [ ] A property inspector. > **Explanation:** An attorney specializing in real estate law typically conducts the detailed research and prepares an Opinion of Title. ### What initial step does an attorney perform to generate an Opinion of Title? - [x] Conduct a thorough title search. - [ ] Perform an environmental assessment. - [ ] Inspect the physical property. - [ ] Estimate the market value. > **Explanation:** The process starts with a thorough title search to review the property's history and identify any issues. ### Is an Opinion of Title a guarantee that a title is clear? - [ ] Yes, it ensures there are no issues. - [x] No, it's a professional assessment, not a guarantee. - [ ] Yes, it always prevents future claims. - [ ] No, it only states the market value. > **Explanation:** It is a professional assessment that informs about the title's status but does not guarantee its absolute clarity. ### What primary benefit does a buyer get from an Opinion of Title? - [ ] An increase in loan eligibility. - [x] Assurance of knowing title issues before purchase. - [ ] Higher property valuation. - [ ] Immediate possession of the property. > **Explanation:** It provides buyers with crucial information about any issues related to the property's title before finalizing the purchase. ### What does an attorney examine to provide an Opinion of Title? - [ ] Property location. - [x] Public records. - [ ] Landscaping quality. - [ ] Construction material. > **Explanation:** Public records are examined to provide comprehensive information on the property's title history and current status. ### Does an Opinion of Title replace the need for title insurance? - [ ] Yes, it renders title insurance unnecessary. - [ ] Yes, because it confirms the title's validity. - [x] No, it is used in conjunction with title insurance. - [ ] No, title insurance depends entirely on lender requirements. > **Explanation:** An Opinion of Title is usually used in conjunction with title insurance, not as a replacement. ### What might an Opinion of Title reveal about a property? - [ ] The ideal market price. - [ ] The building's architectural style. - [ ] Areas suitable for development. - [x] Liens, encumbrances, and other legal issues. > **Explanation:** It reveals any liens, encumbrances, or other legal issues that may affect the property's title and ownership.