Michael Johnson, REALTOR, ABR - Goose Creek SC

Understanding the Title Search

Among the many areas of due diligence in buying a home, a title search, or sometimes called a title examination, is one of the most important. The title is a document that gives evidence of an individual's ownership of property. The title search is usually performed by an attorney (usually the closing attorney) in an effort to ensure that the title on a particular house is free of encumbrances. An encumbrance is any lien, liability, or charge against a property. The attorney performing the title search will be looking for many things including:

1. Mortgages - looks for 2nd and 3rd mortgages that may affect the closing.
2. Life Estates
   
3. Right of Ways
4. Judgment liens
5. Special assessment liens
6. Current leases
7. Deed restrictions
8. Easements
9. Tax liens
10. Mechanic liens.

It is important to note that if a buyers is securing a loan from a lending institution, that lending institution will require a title search to be performed to assure the seller is conveying a good and marketable title. Upon completion of the title search, the attorney will most likely offer the buyer Title Insurance.

What is Title Insurance? Title insurance normally covers defects which do not appear in public records. Title insurance indicates only that title is insurable and not that it is without defects. If no defect is found it is considered Marketable Title, which means that it is a title that an ordinary person in an ordinary market would accept. This is based on the concept that no title is completely free of all defects. There are two type of title insurance policies. Mortgagee Policies are policies that would cover the amount of the mortgage only. Owners Policy are policies that would cover the owner's equity plus the mortgage if there were one.

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Buying real estate is a a great long term investment. After all, as Mark Twain once put it, "Buy land, they're not making any more." When getting involved in real estate it is important to make the distinction between the two major types of property and the rights involved in each. The two types of property are Real Property and Personal Property.

What is Real Estate? Generally speaking, real estate is defined as any interest in land. Note that interest in this case is defined as one's rights, powers, privileges, and/or immunities in real estate. Land is best described as the surface of the earth extending downward to the center of the earth and upward to infinity, including things put there by nature such as trees and water. This is mostly associated with real property.

What is Real Property? Real property is the land plus things permanently attached to it either by nature or by man. For example, the lot plus the house, fence, trees, bushes, and/or a well would be considered real property. Real Property comes with three property rights:

1. Mineral Rights - the property owner usually owns the mineral rights below the surface since land ownership extends downward to the center of the earth. The right to mine the property or sell the mineral rights usually comes with ownership.
2. Air Rights - Because ownership of land extends upward to infinity land rights include the air space above the land. The government most often will supersede and restrict these rights with zoning restrictions and by allowing aircraft to use the airspace above your land.
3. Water Rights - Water rights vary by state and usually fall into one of two categories: Riparian Rights and Littoral Rights. Riparian Rights deal with ownership of property along bodies of water that flow (rivers and creeks) and property lines depend on local laws. In South Carolina Riparian property rights hinge on if the stream is navigable or non-navigable. Property owners along navigable rivers and streams property rights extend only to the water's edge. Those along non-navigable rivers and streams could own the land under the stream to the center of the stream. Littoral Rights deal with ownership along large lakes, seas, and oceans affected by tide currents. Ownership here usually extends to the mean high water mark.

What is Personal Property? All property that does not fit the definition of real property is usually classified as personal property. Personable Property is usually movable. Historically Personal Property has been called (and is still called this in some areas of the country) personalty or chattel property. Types of Personal Property include:

1. Emblements - Emblements are annual growing crops (must be replaced each year). Examples include corn, wheat, and tobacco.
2. Trade Fixtures - these are fixtures used in a trade or business by a tenant. These include store shelves or restaurant equipment.
   
3. Chattel Real - this is usually paperwork that displays an personal property interest in the real property. This includes leases, mortgages, and land contracts.

Most people who are not involved in real estate day in and day out often get confused with the industry terminology that Realtors routinely use. It can be a confusing barrage of lingo that frustrates buyers and sellers. One of these terms is Earnest Money.

What is Earnest Money? - Earnest money in real estate is "good faith money," or as I like to call it serious money. This is the money that a buyer usually puts up to show the seller that he/she is serious about buying a house. This is often necessary in the mind of the seller because buying a house usually takes about 30 days (depending on the situation) from the time the buyer and seller ratify a contract until the time of the closing. The earnest money from the buyer is put is an escrow account and held by one of the involved real estate brokerages until the closing. If all goes according to plan and the buyer buys the house from the seller, then the earnest money is credited to the buyer at closing. But, in the event that the buyer backs out of the contract, without proper cause within the contract, the earnest money goes to the seller and the seller must then put the house/property back on the market in hopes of finding another buyer.

How Much Earnest Money? - It is important to note that in South Carolina there is no law requiring earnest money nor is there a law determining how much money should be put in escrow for any given price range. But, most sellers will not consider an offer without the earnest money being part of the offer. Why? Because the seller is taking a risk. You see once the seller accepts an offer on their home, the home is taken off of the "active" listings on the market. The seller usually secures a new place to live and begins the process of moving his/her household goods into another home or storage. The earnest money ensures that if the buyer backs out (apart from what is allowed in the contract) the seller is compensated for the risk of any potential buyers that were lost as well as their time and trouble involved.

So how much is required? I know many places around the country have an unwritten rule of 3%-5%. The only time you will see that around Charleston is with some new construction builders and with some bank owned properties. In the Charleston SC market, anything under 125K usually calls for an earnest money deposit between $500-$1000 (unless otherwise specified from the seller). Anything from 125K-250K usually calls for an earnest money deposit of $1000-$1500. Anything from 250K-500K usually calls for earnest money between the amounts of $1500 and $2500. Anything above that is usually specified by the seller. Just like anything else in real estate, earnest money is usually negotiable.

The key thing to remember about earnest money is that is should be used to strenghthen the offer of the buyer. A solid offer, a preapproval letter, and a reasonable sum of earnest money can go a long way in convincing the seller to accept the offer of a buyer.

Do you like books? I do! That's why I love going to the annual Charleston County library book sale. It is a great time to go through some used books and get a great deal on them. Don't miss this year's event going on this weekend at the Gailliard Auditorium. It is going on today Saturday, 10 Oct 2009, from 9am-7pm, and on Sunday, 11 Oct 09 from 10am-3pm. Go check it out.

Click here for more information

Goose Creek South Carolina, a suburb of Charleston SC, has a real estate market that continues to sell amidst the market decline. The number of homes sold are not what they were a year ago but Goose Creek real estate remains steady nonetheless. In September of 2009 50 homes sold in Goose Creek. There are currently just over 400 homes on the market in Goose Creek.

The following is a graph of the top selling neighborhoods in Goose Creek in September. Note that what is mostly selling in Brickhope Plantation and Brickhope Greens is new construction.

In the overall market of the Charleston SC Metro, Goose Creek ranked number five on the list of cities with the most homes sold in September as demonstrated in the graph below.

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