Many of the posts I share with you are based upon recent experiences or situations arising in my practice as a lawyer assisting real estate investors, particularly self-directed IRA account holders, in making investments. I have noticed recently that there is some confusion among investors as to what constitutes the legal description for a piece of real property. When doing a transaction involving real estate, the legal description is an essential component of the transaction documents; yet too often, I’m seeing investors, lenders and account holders struggling to understand what the legal description really is and why it matters.
Without consulting any legal textbooks or looking it up online, my explanation of a “legal description” is that it is the carefully written language that a surveyor or others can use to understand and define the boundaries of the piece of property. It tells where the property lines begin and end in all four directions. I have seen legal descriptions that were as brief as three lines and some that encompassed a page and a half of single-spaced, indented type.
The legal description is what is put into the deed or conveyance instrument that actually determines what land is being transferred by that instrument. Properties do not change hands by addresses. They change hands by legal descriptions. These legal descriptions are also vital when it comes to properly preparing mortgages, deeds of trust and other types of documents such as options, rights of first refusal and land installment contracts.
To locate the legal description for a property, there are two places you can look. It can be found in the title commitment, and it can be found in the prior deed to the property, the one whereby the current owner of record holds title. The easiest one to supply to your lawyer will probably be the copy of the prior deed because that is usually available online through public records access in most county offices. Part of the language contained in the maps or language describing the property on Zillow or some other online listing site are NOT the legal description.
If you are the investor/buyer, part of your due diligence package should include looking at the deed whereby the current owner of record holds title. If you are the proposed lender, it is prudent to have a copy of the prior deed as well as a preliminary copy of the title commitment to review before authorizing the release of funds to verify that your loan can be secured in the appropriate place and is not subject to prior unsatisfied liens, taxes, etc.