A deed is a legal document that details the transfer of a piece of property. Having the title to the property is about who has the legal right to use the property. As Millionacres indicates, that’s why a title search is so very important if you’re buying a piece of property. Before you hand over your hard-earned cash, you want to make sure that the person who is selling you the home actually has the legal right to do so. What is involved in a property title search?
What Is Involved in a Property Title Search?
According to LegalZoom, you can technically conduct a property title search yourself if you don’t mind putting in the time and effort. However, most homebuyers choose to hire attorneys or specialized title search companies when they see what is involved in a property title search. That’s because performing a title search requires chasing down and reviewing a host of public documents in numerous locations. While you may be able to do some work online, you’ll likely need to visit the local courthouse, county clerk’s office, registry of deeds, recorder’s office, and other county offices to check for the deed, judgments, liens, and any other encumbrances. To add to the fun, each county and state has its own unique method for filing land records, so there’s no standardized system to guide you. It’s tedious, time-consuming work that requires meticulous care, and even a small mistake can have serious consequences. While a do-it-yourself approach may seem less expensive at first, it could prove costly if you miss something, and that’s easy to do.
How much does a property title search cost?
As with many real estate expenses, the price tag for a property title search will vary by location. According to Realtor.com, a basic tract search starts out at around $150. Meanwhile, a comprehensive Ownership and Encumbrance report is generally less than $1,000.
What issues can a property title search turn up?
The purpose of a title search is to ensure that the home’s title is free of clouds or defects. After all, no buyer or seller wants to see their deal fall through at the last minute because a dramatic discovery reveals that the seller doesn’t actually have the right to sell the property, and lenders are generally unwilling to process loans for properties that lack clear titles. What issues can a property title search turn up? LegalZoom offers a list of possibilities:
- Tax, mechanic’s, or creditor’s liens on the property
- Easements, permits, or agreements that impact the use of the property
- Multiple mortgages against the property
- Violations of building codes or zoning ordinances
- A break in the chain of title that prevents the current owner from having a clear title
- Bankruptcy proceedings by the current owner
- Pending or current foreclosure proceedings
- Judgements against the current owner, which could be converted to liens before the sale
- Pending or active divorce proceedings, which could impact ownership of the property
- Inheritance dilemmas raised by certain forms of nonowner occupation
- Boundary disputes with neighbors
What is title insurance?
If issues are found during the title search, they’ll need to be resolved before the sale can move forward. What happens if an issue isn’t discovered until after the sale? That’s why lenders insist on title insurance. As Investopedia reports, title insurance is a type of indemnity insurance that protects either lenders or homeowners from defects in a property title. There are two types of title insurance:
- Lender’s title insurance protects the lender’s interests in the event of an issue with the title. Lenders generally require that the buyer purchases a policy by paying a one-time fee at closing.
- Owner’s title insurance protects the homeowner’s interests if a problem emerges with the title after the sale of the home is completed. This is an optional purchase. Sometimes, the seller pays for this with a one-time premium payment at closing as a show of good faith. In other situations, the buyer chooses to buy their policy.