Of course, when a realtor takes a listing it is imperative that the listing realtor does a title search.
The listing realtor must know what financial claims are registered against the title, and ensure
that there will be sufficient equity to pay those claims and commissions. If it is close, don’t
forget about confirming that taxes have been paid AND don’t forget about pay-out penalties.
You cannot rely on what the seller tells you regardless of how honest and forthright the seller
may be, because now sellers do not always know.
As lawyers, we see sellers who have no idea that they had a Line of Credit mortgage registered
against their title. This is not uncommon nowadays because banks will sign up peOple on a Line
of Credit Mortgage at a bank branch and do not explain to them that the bank is registering a
mortgage. So sellers are sometimes surprised when we tell them that their Line of Credit must be
paid’from the sale proceeds. If there is not enough equity to pay it out in full, plus commissions,
you can guess who loses. There can be dire consequences for the listing realtor.
If you do a title search, and find out that there are claims that exceed the owners’ equity, there are
ways that you may be able to deal with those claims and still get a listing. But it is complicated
and risky. I will e-mail you more about that next time.