Preliminary title reports are the source of basic legal due diligence information. The list of exceptions documents included in the preliminary title report references exceptions to title insurance coverage and, as such, may represent circumstances that could impair the parcel’s value. Typical documents found listed as exceptions documents are deeds, easements, surveys, plat maps, and CC&R’s.
Require a minimum of ten days for legal review and evaluation of the preliminary title report, and the exceptions documents identified in it. Make acceptance and approval of these documents a contingency on the purchase and sale contract.
As in most jurisdictions, Montana title insurance will not cover negative impacts that public-record documents have on the title or use of a parcel. Review the preliminary title report and the public record documents prior to undertaking other due diligence items. The purchase and sale contract’s calendar of performance must account for this document review, along with a review of other necessary environmental reports, estoppel certificates, and documents such as may be used in commercial, industrial, or agricultural land purchase contracts.
The contract may also contain a Title Contingency Addendum. This Addendum gives the buyer a specified number of days from either mutual acceptance of the agreement or the date the buyer receives the preliminary title commitment to give written notice of the buyer’s disapproval and the reasons for the disapproval. The seller then has a certain amount of time in which to give the buyer written notice that the seller will clear all disapproved encumbrances on the property. The seller has until the closing date to do so, or the agreement may be terminated.
The exceptions documents referenced in your preliminary title report are found at the County Recorder’s office. Beyond County Recorder’s documents, there may be other federal, regional, state, or local agencies that have relevant public records involving the parcel, such as the local planning office.
NOTE: This posting is not legal advice. This information is general in nature. Legal advice is based on specific facts.