Purchasing a home is often a family’s largest financial transaction. Because so much is on the line, it is wise to take steps to protect this investment. One of the most important steps happens before homeowners even finalize the deal: a title search.
What is a title search?
A title search is a process that involves a full review of public records for the property. It digs through records to determine legal ownership and see if there are any claims against the property. The search reviews the chain of title, recorded liens, judgments, easements, plats and even probate filings. It can reveal boundary conflicts, encroachments or unrecorded access issues as well as unpaid taxes, code enforcement fines or special assessments.
What types of claims might be against a property?
The issues can be complex, like problems passing after an owner dies, or relatively simple, like a contractor taking a lien out on the property for an unpaid bill for work on the home. Common examples of issues that can dirty or cloud a property’s title include:
- Unreleased mortgages, tax liens, judgment liens
- Boundary disputes, encroachments, unrecorded easements
- Breaks in the chain of title, recording errors, forged deeds
- Probate issues, missing heirs, improper authority for prior conveyances
- HOA liens, restrictive covenants, use limitations
It is important to find and address these issues prior to closing to better ensure a smooth transfer of the title.
Why does a clean title matter?
Without a clean title, the buyer cannot take full ownership of the property. If a title search results in issues like those noted above, a buyer can negotiate a resolution with the seller. This can include a quiet title action if the issue involves mortgage lender disagreements or issues with transfer at the death of previous owners. Buyers can require the seller to cure the title, negotiate terms or exit the deal depending on contract language. Lenders may refuse to fund the sale until the defect is cured or the buyer retains proper insurance coverage to address the issue.
Title issues are often manageable when identified early. A thorough search, a current survey and a disciplined review protect a buyer from taking on hidden debt, access disputes or future ownership challenges.