One of the most important parts of a real estate transaction is the due diligence period or ‘Inspection Period’ of the AZ Association of Realtor contract permitting buyers to do as much research about the home and anything material that may pertain to the pending purchase of home in Phoenix (AZ).
During the due diligence period you will be provided at no cost a title commitment and full title report for the subject property. It is critical you read this thoroughly. Do not rely just on your Realtor to tell you if it is acceptable because there is no way any Realtor can know what is important or ‘material’ to you.
there are three particular areas that you should pay exceptional attention to:
1) tax Sheet and plat maps - this indicates your tax obligations to the municipalities and state as well as the outline of your property map and within the area is situated
2) title commitment – this is where the title insurance company provides their commitment to give you insurance against any unrecorded liens, encumbrances or other issues should they arise later. This is subject to schedule be section 2 which outlines the exceptions to this commitment. The exceptions portion is critical as it indicates where you were not covered.
3) exceptions - In the exceptions portion is arguably the most important parts of the title commitment as it indicates where you are not insured. There are certain defects, liens such as taxes, easements for utilities, conflicts of boundary lines, water rights, sanitary district easements and eminent domain issues that will be on all scheduled B, section 2, exceptions.
However, this also is the section of the title commitment that will refer to homeowners associations and other governing bodies that have covenants, conditions and restrictions (CC & R’s). If there are covenants, conditions and restrictions you are subject to their rules and guidelines. If this is material to you, make sure you read the declaration of reservations page of the title commitment policy.
This Declaration section will and must indicate your responsibilities such as fees. If there are no fees it will indicated rights to prevent you or allow you to do certain things as it pertains to your property. In Scottsdale, and in many areas of greater Phoenix, there are either HOA’s or at the very least Committee of Architecture’s that rule properties. If this is material to you, you have the right ans the opportunity to cancel the transaction. Make sure you do your due diligence. Do not rely upon your Realtor to decide if this is something that you might be ‘ok’ with.
If you need help understanding Title Reports and Title Commitment Policies, your first call should be to your Title Officer with questions and to request clarification. Again, that does not mean you should not read it in great detail as well as ultimately, you are the person buying the home.
James Wexler ~ Associate Broker ~ Realty Executives ~ 480-221-8080