If you've ever purchased a property, you know how frustrating those last-minute delays can be when your closing date is fast approaching. Often, delays are unavoidable, but there are many times where these delays could have been prevented. According to the National Association of Realtors, 9% of all closing delays are related to issues associated with the title of the property. For this reason, it is a good idea to perform a title search on the property to avoid delays in your closing.
What is a Property Title?
The title of a piece of property relates to ownership and determines who has a legal right to use the property, and only the person or entity who owns the property has the right to sell a property. While a deed to the property simply shows that the property was transferred to another party, the property title tells who has legal ownership of the property.
Everything that affects a piece of property such as ownership, outstanding mortgages, caveats, and covenants are listed on the property title. If there are unknown financial liabilities that need to be satisfied, then these would pass on to the next owner along with the title to the property; thus, having a clear picture of the title of a property is invaluable when purchasing a piece of real estate.
What is a Property Title Search and Why Do You Need One?
A title search will bring to the surface all public information relating to a property and can save a potential new owner a lot of headache later. Performing a thorough title search can reveal crucial information that might hold up a closing or disclose potential issues that could show up years later as title defects.
This comprehensive report will reveal:
- Contractor debts
- Public utilities easements
- Covenants, conditions and restrictions
- Tax liens
- HOA liens
A property title search will also include any deed restrictions or limits to how the property can be used, such as whether the owner can run a business from the home, can remodel or add to the existing structure, build adjacent structures, restrictions involving the type and number of vehicles permitted on the property, where and what kind of fences can be built, or if there are any pet restrictions.
Ultimately, the purpose of performing a title search is to assure that the transfer of ownership of a property is legal and can move forward with minimal risk or liability to the buyer.
When is a Property Title Search Necessary?
Generally, a title search is standard to the process of closing on the sale of a property and is a requirement of the lender; however, there are circumstances that would warrant a property title search outside of the closing process.
Investors or buyers who may not need a lender to finance the transaction or an owner who may be interested in refinancing may seek a property title search. In these situations, you may not want the added expense of hiring a real estate attorney or a title examiner.
How to Do Your Own Title Search
Conducting a title search on a property can be a tedious and arduous project depending upon the complexity of the property's history, but it is doable if you're willing to put in the time…and effort.
The first step is a visit to the county clerk's office to sift through past deeds, tax records and other financial transactions linked to the property. Often, these records are online, but if the information online does not go back to the property's original deed or if the information is incomplete, then it would mean an in-person search to peruse the physical paperwork on the property.
It is important to locate the most recent deed on the property to ascertain if the name on the most recent deed matches the name of the person who is selling the property. You will move backward from the most recent deed to verify that there are no gaps in ownership in the history of the property. This process is called creating a chain of title.If there is a break in the chain of title, then it may be wise to consult with a real estate attorney to gauge associated risks in attaining the property.
Next, you will need to analyze the financial records to determine if there are any liens, mortgages, judgments or outstanding taxes associated with the property. If any of these exist, then that could mean that these title defects could pass to a new owner, so they would need to be cleared by the seller prior to closing.
While completing your own title search is certainly possible, it may offer more peace of mind to allow experts to perform a thorough title search on your potential investment. This is particularly true when the title does not appear clean, there are financial liabilities present, or the purchase of the property proposes a significant financial investment. It could just be better safe than sorry.
You Can Trust Hollerbach
If you find that you don't want to take on the complex matter of conducting your own title search on a property purchase, contact Hollerbach to assist you. With over 35 years of experience and our history of excellence in title research and abstracting, you can bet that you're in good hands with Hollerbach. Contact us today.