Your Questions Answered: De-mystifying Property Title Search

Waiting for your house to close might feel like standing in line at the DMV - it takes forever, and just when you think you've made it to the front, another delay occurs. The property title search, for example, is one of the more onerous aspects of closing on a home.

According to the National Association of Realtors, property title issues account for around 9% of closing delays. A property title search is a simple approach to avoid closing delays. So, what exactly is a property title search? We've compiled all of the pertinent information for you.

What Is The Legal Name Of The Property?

The property title establishes who owns the house and, as a result, who has the right to sell it. This may appear simple at first, but liens on the property might impede a buyer's ability to sell their home because they must first satisfy any liens or claims.

Only the owner of the property has the right to sell it. Again, it may appear simple, but imagine a husband and wife seeking to sell their home, but the house is only in the wife's name. The only person who can sell the house is the woman, not the husband. This is particularly helpful in difficult family situations such as divorce.

What Is A Title Search For Real Estate?

Some ask "what is title?" A property title search is, in a nutshell, a search for papers pertaining to a given property. The property title, which establishes who has legal ownership of a residence, may not contain all of the most recent information about liens. It's also possible that it doesn't include the property's entire history.

A complete property title search looks for all local documents and sources to find all accessible information about a property. Most crucially, a property title search will reveal who else has a claim on the property besides the owner.

"Anyone who undertakes home renovation work can put liens on a house," says Tyler Bundy, an Omaha real estate agent.

"I had a situation where a contractor filed a lien on the property, alleging that the seller had not paid him for work he had completed. The house was thereafter encumbered by a city lien."

A property title search will also reveal any deed restrictions, which means it will inform you if the property's usage is restricted. For instance, the city may have a limit on the type or amount of construction that can be done on a property. The following are examples of deed restrictions:

• Fence construction
• Obstructing the view of a neighbor
• Vehicle type and number
• Structures near each other
• Building permits are required
• Having a home-based business
• Restrictions on pets
• Color scheme
• The number of rooms

Knowing the deed restrictions is vital if you want to know what you're getting into before you buy a house.

A property title check will also indicate whether the property has any easements. An easement is a legal privilege that allows someone else to use someone else's property. This is sometimes the case with utility companies, when the owner may allow the utility company to utilize a portion of their land; or if a property stretches across a section of road, the owner will grant public access to the road.

The property title search also includes property boundaries. If you have a fence or a clearly defined property division along the side of a driveway, this may appear to be a simple task. However, if earlier construction mistakes were made, difficulties can develop, thus it's critical to know exactly where your property lines are.

When Would You Get A Title Search On A Property?

Property title searches are most typically done during the closing process, after a buyer has placed an offer on a home but before ownership is officially transferred from the seller to the buyer.

Other instances, such as investment properties, would necessitate a property title search outside of the closing period. "If you're an investor and a seller is offering you a property at a big discount because they're having financial difficulties, you should certainly pay a title company to run a short search to make sure the title is clear of any liens or encumbrances," Bundy advises. "If the property has liens on it, you can adapt your offer and bargain accordingly."

In A Property Title Search, What Sources Are Used?

A property title search considers the following factors:

• Land records in Deeds County
• Tax liens, both federal and state
• Cases of divorce
• Cases involving child support
• Records of bankruptcies
• Financial decisions

 

A Property Title Search Is Carried Out By Who?

During the closing process, a title company or an attorney usually conducts a property title search. However, in some situations (such as the investment example above), a person could engage a title company to conduct their own property title search.

How Much Does It Set You Back?

The price of a property title search varies depending on your location and the amount of information you need. A basic land report costs $150, while a full ownership and encumbrances report costs $1,000 or more. The cost of a property title search is normally included in the closing fees and the cost of title insurance.

What If The Title Of The Property Has Issues?

During a property title search, problems such as the following may be discovered:

• Debts owed to contractors
• Loans
• Easements for public utilities
• Bankruptcies
• Debts incurred through gambling
• Liens for child support
• CCRs (covenants, conditions, and limitations) imposed on the property
• Taxes
• Restrictions, historical oversights, and planning requirements are all factors to consider

If an issue with the title is discovered during closing (or before), there are a few options for resolving it.

To clear the title, the seller must first pay any debts owed to them. But what if the vendor lacks the financial means to do so? Then things get a little more complicated, and discussions begin.

The buyer and seller may agree to split the cost of removing the "cloud" from the title. Alternatively, if a buyer is desperate for the house, they may accept to inherit the debt along with it. This is most common in competitive markets, where buyers are willing to pay significantly more than the asking price for a home. "If a buyer is willing to spend $5,000 or $10,000 more than the asking price, it's not a big issue to pay to clear up the title search and then ask the seller for a discount," Bundy says.

Deals fall apart when the buyer and seller are unable to reach an agreement.

 

What Happens If The Title Search For A Property Misses Something?

If you've ever wondered why title insurance is required when purchasing a home, this is the reason.

Title insurance covers you in case there are any issues with your title. Title insurance protects the buyer and ensures that the title firm will address any problems that arise if the search misses something. There are no monthly premiums to worry about with title insurance because it is purchased with a one-time premium payment made at closing. As a result, you will be protected as a homeowner.

Is It Possible For You To Conduct A Property Title Search On Your Own?

You can do the property title search yourself, but keep in mind that it will take some time. You'll need the legal description of the property, not the address, to achieve this. An attorney normally prepares the legal description, which is a written, documented document that describes the borders of a property.

You'll need to find the courthouse where the property address information is kept once you have the legal description. You'll need to go to the office and request the property's title and deed information. In most cases, you won't be able to acquire this information from the office online and will have to visit the office in person. Take down the names of the owners; you'll need them later.

Then, using the property's tax records, hunt up the county assessor's office. Inquire about the property's tax assessment with the clerk at the county assessor's office.

After that, locate as many prior owners' vital records as possible. Birth certificates, death certificates, marriage licenses, and domestic partnership or civil union records are all examples of vital records.

Check for any missing heirs or other relatives who might be entitled to the property. You can sometimes find vital records online, but if you can't, you'll have to go to or call a vital records office.

Finally, see if any previous owners have outstanding legal judgements against them. Court dockets are normally available for free online, but you will almost certainly have to pay to view related court files. Check for any liens or encumbrances on the property that are the consequence of a court ruling.

You should have all the information you need to establish whether or not you have a clear title once you've completed all of these processes.

Whether you undertake your own title search or hire a title company to do it for you, the information you obtain can make or break your home purchase. Make sure you have all of the puzzle pieces in front of you so you can move forward in the appropriate direction.