A real estate transaction can only proceed if the house has a clear title. That means that the party selling it has the legal right to do so and that there are no liens or claims against the property. A title search can turn up any issues that may exist.
When and How Is a Title Search Conducted?
A title search is usually performed after the seller has accepted the buyer’s offer. Someone who wants to buy the property may request a title search, or a lender may request one before approving a mortgage. A title company or attorney can check deeds, land records, tax liens, bankruptcy records and divorce and child support orders to identify any judgments or claims against the property. A title search can also identify any pending lawsuits against the owner.
If you request a title search, you will be given a preliminary title report that will include information on any issues discovered. If an issue would be relatively easy to resolve, you can require the seller to address it before you proceed with the purchase. If there is a more serious or complex issue and you need to close by a specific date, or if you simply don’t want to deal with the hassle, you may choose to walk away.
What Types of Issues May Be Discovered in a Title Search?
The property may be owned, in whole or in part, by someone else. It is possible that someone legally purchased the property but that the title was not recorded for some reason. A document may not have been signed where required or a signature or document may have been forged. An easement may not have been recorded properly, the location of the property line may have been reported incorrectly or there may be a tax lien against the property.
What is Title Insurance?
Even if professionals review documents, they may miss something or a document may contain an error. If a lien or judgment against the property is not discovered during the title search and you buy the house, that lien or judgment can become your legal responsibility. You can purchase title insurance to protect yourself and your mortgage lender from issues that might be discovered later.
How Much Does a Title Search and Title Insurance Cost?
Costs for a title search and title insurance vary by location. They also depend on the purchase price and loan amount. While you might be able to perform a title search yourself, you would have to comb through a large volume of documents. If you don’t have experience in this area, you may miss something important. It would be better to trust such an important matter to professionals with training and expertise in this area.