P03-Evidence of Title

                        

Objective Form:

03.1  Within ___________ days of the date hereof, Seller shall
furnish to Buyer at (Seller's or Buyer's) cost and expense, a
commitment or preliminary binder for a fee owner's title policy
in the amount of $_______________ issued by a company duly
authorized to transact business as an insurer of title to real
property in the state in which the premises are located and which
is reasonably acceptable to both Buyer and Seller.  Where such a
commitment or preliminary binder is not available or allowed
under local law the Seller shall furnish an abstract of title or
registered property abstract from an attorney or other entity
duly licensed and authorized to abstract titles in the state in
which the premises are located.

03.2  Such commitment, preliminary binder or abstract shall
serve, for all purposes, as evidence of the status and state of
title to the property hereunder.


Comment:
    The objective form simply provides a Buyer with evidence of
the status of title to the premises prior to closing, in the form
of an abstract of title or title commitment.  It places the onus upon
the Seller to obtain such evidence of title, although leaving the 
identity of the abstractor or insuror to be decided between the parties.

Alternatives:
    A provision such as the objective form is found in a large
majority of instances, modified in certain respects.
    Many times the Buyer procures its own evidence of title from
any company with which it is comfortable, it being felt that the
Buyer, who will be covered by insurance, should be free to choose
its insurer.  Where this is the case the clause might be changed
as follows:
         "Within ___________ days of the date hereof, Buyer shall
         procure a ....."
    From the Seller's perspective, however, the title company or
abstractor may be important where there are or may be objections
to title which the Seller wishes deleted from the Commitment.


Here it is important that the abstractor or insurer be agreeable
only to the Seller and the clause should be amended to delete the
wording "and which is reasonably acceptable to Buyer and Seller."
    In some states it is the local practice for a Seller to furn-
ish and pay for a "title guarantee."  A title guarantee is, in
effect, a guarantee by the insurer that the status of record 
title, as reflected in the guaranYtee, is accurate.  In other
words, it guarantees that there is nothing of record other than
the exceptions noted on the guarantee.
          ".......Seller shall provide a title guarantee issued
         by a company......"
    In instances involving improved real estate, the Buyer may require
evidence of title which includes the status of the property regarding
encroachments, boundaries, mechanics liens and special tax searches for
taxes and assessments not of record but effective by resolution of a
governmental body.  In such instances the form may be amended to provide:
         ".......Seller shall provide Buyer, at (Seller's or
         Buyer's) cost and expense, a commitment for a fee
         owner's policy with extended coverage for encroachments,
         boundaries, mechanics liens and special tax searches..."


    The amount of the title commitment may be best left un-
determined by Seller or Buyer where the allocation of the
purchase price between land and other fixtures or machinery is at
issue.  In such event the words "in the amount of $_____________"
would be deleted from the objective form.