A title and survey contingency is a condition included in a real estate purchase contract that provides the buyer with the option to cancel the contract or renegotiate the purchase price if any issues with the property's title or survey are discovered. On the standard Realtor Purchase and Sale agreement or RE21 in Idaho, this contingency can be found in section 11. It is important to understand your rights in Section 11 as a buyer. As long as you perform your title inspections in the timeframe stated in the contract, this section can protect you against title and boundary issues. Your title officer will perform searches to make sure title and boundaries are correct before closing. The title company will then issue title insurance.
A title is the legal document that proves ownership of a property. A title search is conducted by the title company or attorney to make sure that the seller is the rightful owner of the property and that there are no outstanding liens or judgments against the property. Any issues that are discovered during the title search, such as outstanding liens or judgments, must be cleared before the sale can be completed.
A survey is a map or plan that shows the boundaries and the improvements on a property. A survey contingency allows the buyer to have a survey of the property done, to confirm the property boundaries, to verify if the property is built entirely on the buyer's land or if there's an easement, or to check for any encroachments or violations of the property.
The title and survey contingency provides the buyer with the option to cancel the contract or renegotiate the purchase price if any issues with the title or survey are discovered. This can protect the buyer from taking on any unwanted liability or problems with the property.
It's worth noting that, while Title and Survey contingencies provide buyers with some protection, they also represent a risk for the seller as they could allow the buyer to cancel the contract even after the contingencies are cleared. A common practice in some cases is to have a title insurance policy in place to mitigate this risk.