Today, I’m here to talk about the one-to-four residential contract, focusing on paragraphs 6a and 6c. Paragraph 6a of the contract deals with title policy, and 6c deals with the survey.

The title policy underneath 6a is negotiable in terms of whether the buyer or seller pays for it. When you write in who the insurance policy is going to be underwritten by, that will be the name of the title company. That may seem obvious, but we often see problems with this part. Some people might work with a fee attorney, who holds the escrow, but that isn’t who is writing the title policy, so it can be different from who you put as the escrow company. For example, if you work with fee attorney Joe Smith who holds that account, but Chicago Title is underwriting the title policy, then you’d put ‘Chicago Title’ under 6a.

What is a title policy, exactly? A title policy is what ensures that the buyer is getting a clear title, that there aren’t any encumbrances on the sale, and that the seller has the sole right to sell it. In paragraph 6a, you’ll also see a space for the ability to amend for shortages. Shortages are the boundaries of a survey, so you can select to do that or not.

“Title policy is what ensures that the buyer is getting a clear title, that there aren’t any encumbrances on the sale, and that the seller has the sole right to sell it.”

What’s the purpose of that? Well, not all surveys are accurate. If someone’s fence ends up being 10 feet over their property line into someone else’s and a problem arises, then the buyer will have coverage. You often see these issues on large acreage tracks, so it’s important to have that boundary coverage.

Paragraph 6c is where surveys are discussed. Here, there are four choices for you to choose from. The first is to reuse the seller survey. This section gives the seller a certain number of days to get you the survey. Many people forget that the T-47 form must also accompany the survey. That’s the form a seller fills out that states what date the survey was done and whether or not it had any changes done to it, such as a new fence or other additions that may cause future issues.

In addition, you can negotiate who is going to pay for the survey if it’s no longer valid. Either the lender or the title company determines whether the survey is valid, and they use the T-47 form to do it. Understand that if you don’t provide the T-47 form, it doesn’t revert to whoever checked the box for whom has to get a new survey because the form wasn’t provided. Instead, it goes back to the seller because they didn’t provide the form that either validated or unvalidated their survey.

There is also paragraph 2 that allows the buyer to get their new survey. Paragraph 3 says that the seller will buy a new survey, and paragraph 4 says that no new survey is needed; if you have a cash transaction, no one but you cares if you have a survey. If you work with a lender, you’ll be getting a survey.

If you have any questions about the one to four residential contract, don’t hesitate to reach out to me. I’d love to help clarify it for you.