This section is from the book "Real Estate Principles And Practices", by Philip A. Benson, Nelson L. North. Also available from Amazon: Real Estate Principles and Practices.
It is customary to follow the description with a statement of the limitations subject to which the property is to be sold. The most common is tenancies. If nothing is mentioned in the contract concerning tenants, the purchaser is entitled to receive an empty house. Consequently if there are tenants in the building, the nature of their rights should be set forth in a provision that the property is sold subject to the rights of the tenant or tenants and specifying rent, duration of lease, space occupied and any peculiar facts with reference to each tenant. The seller protects himself by merely stating that he sells subject to the tenants' rights, but the purchaser should insist on full details being set forth.
Any restrictions or limitations upon the use of the property should also be stated at this point. If none is mentioned the purchaser is entitled to the realty free and clear of any such. The seller to protect himself must see that they are enumerated. The seller's land and the neighborhood may be restricted for mutual benefit, to buildings of certain size, character and price. The neighboring owner may have an easement to use the side wall as a party wall. There may be an agreement between the seller and an adjoining owner whereby each undertakes to maintain one-half of a joint driveway between their buildings. The seller may have given consent to trolley or elevated railways or for the maintenance of electric or telephone wires or poles. A survey of the property may show encroachments or other variations. These are examples of restrictions or limitations which the seller should have inserted in the contract.
It cannot be too much emphasized that the seller is legally bound to give an absolutely clear title free from all encumbrances except those specifically mentioned in the contract. Any encumbrances upon the property which the seller fails to except, he must remove; hence the care he should use in making certain to state those encumbrances subject to which he sells the property. The following is an illustration of the statement:
"Subject to the rights of present tenants as monthly tenants; to covenants and restrictions of record and to any state of facts an accurate survey may show."
This clause may be readily altered to cover any encumbrances, or amplified if the purchaser require a more detailed statement.