Title searches are crucial before buying or selling real property, as they might unearth an issue that could hinder the transfer of the deed. A buyer might identify a hidden debt attached to the property or a lien that might make their lender back out, while a seller might learn they don't even have the legal right to sell.
Overview of property title searches
Conducting a title search entails examining countless documents, including deeds, contracts, and other recorded papers, to learn whether the owner owns the property “free and clear" of any defects, such as outstanding liens or zoning violations. As the buyer, you want to make sure that you get a clear, or marketable, title so you don't have legal issues in the future.
While attorneys and specialized companies can do a title search, you can also conduct one yourself. Some cities have their own websites that help prospective buyers perform some parts, but not all, of the search.
Although either of these routes can be far cheaper, they may end up costing you more in the long run if you fail to identify a legal snag. Any defects in title can prevent an owner from selling the property, while those same defects can prevent a buyer from purchasing their dream home.
What a title search can find
A title search can find many problems that could keep a property from being marketable. Some of the most common issues found are:
- A break in the chain of title, where someone who didn't own the property conveyed it, thus preventing the current owner from having clear title
- Tax, mechanic's, or creditor's liens on the property
- An easement that affects the property's use
- A bankruptcy by the current owner, causing ownership to be unclear
- A situation where the property is occupied by someone other than the owner and the death of the actual owner would cause someone else to claim ownership of the house during probate
- Town zoning ordinances preventing your desired use of the house, such as not being able to have a home business
- The existence of more than one current mortgage, all of which the owner must pay before sale
- Judgments against the owner, which could result in liens being added before the sale
- Claims by neighbors of ownership of part of the land, often as the result of a property survey
- A pending or current foreclosure
- Local permits on the property that could “cloud" title, or prevent conveyance of a clear title, such as a permit that allows the electric company to install power lines or towers on your property
- Pending divorce proceedings, in which a spouse could contest transfer of the property
- Building code violations
Whether you're the seller or the potential buyer, check with a real estate attorney if you have any questions about the consequences of any encumbrances on the property. Then, when the property is free and clear, they may also be able to help with transferring the deed.
The title search process
Performing a title search requires reviewing public documents in the county clerk's office, registry of deeds, recorder's office, local courthouse, or any of a number of other offices in your county. Most searches are incomplete unless you visit several locations to check for the deed, liens, judgments, and other encumbrances.
Each state and county files land records in their own unique way, which can make it difficult to know where—and how—to look. Databases or land record books could contain the information you need. Some offices record the documents, such as the deed and the real estate contract, under a number system, the property location, or the owner's name.
For a home title search, you'll need the location, block, and property lot, the owner's name, and whatever else you know about the property. You then use this information to search for multiple deeds to ensure that no unexpected names appear on the documents and that the property was always properly conveyed. Gaps in ownership should not exist. Looking for multiple documents makes the search lengthy and tedious, which is why the vast majority of home buyers choose to hire a title company.
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