What is a Title Search?
Have you heard your mortgage lender or real estate agent mention title searches and wondered what they were referring to?
Property searches are done on nearly every real estate transaction.
Understanding a title search is crucial when purchasing a house or other real estate.
Property title searches examine public records to confirm a property’s legal owner. Property searches will also verify if there are any liens or claims that could impact a buyer’s ability to purchase.
Buying a home can be an exciting experience, but it also has the potential for a lot of stress.
While you might be eager to finish the buying process and move in, there are a lot of required stages to go through to ensure everything is legal.
Many stages of closing on a home can potentially delay your closing date. It can add to your frustration if you don’t understand why these processes are taking place.
The title search is one of the parts of closing that can confuse home buyers and delay closing.
We have the answers if you’ve ever wondered what a title search is, what it involves, or if you need it. Let’s look at the importance of a property title search when buying a home.
The search for a title is a critical aspect of a real estate transaction for a good reason.
What Are Property Searches?
The property title contains details of who legally owns the home. While these documents should give you all the information about liens on the property and who owns it, they might not be up to date.
The property title might also miss much of the history you’ll want to know when buying the home.
Using a title search company gives you a more thorough search of the records to find documents that would otherwise be hidden. Title searches will find out the home’s legal owner and reveal anyone else with a claim on the property.
There could be liens on the property that must be resolved before closing. If the home has had any improvements, the contractor could have put a lien on the title if they weren’t paid, for example.
When a homeowner misses paying HOA fees or property taxes, it should be revealed in a title search. Sadly, if you were to buy the home without a title search, and there are liens on the house, they could become your responsibility.
If this were to happen, you could be left with a hefty bill to pay that could put you in financial difficulty. For this reason, a mortgage lender typically wants to make sure title searches are completed, and they also sometimes require title insurance in case something gets missed.
What is a Chain of Title?
A chain of title is a property’s history of the transfer of ownership. When buying a specific piece of property, a title searcher will be hired to trace the chain of title to ensure a seller has valid ownership.
Title companies or a real estate lawyer can conduct the chain of title. Legal ownership of the property will be established once the chain of title work is completed. The chain will run from the current owner back to the original owner.
A chain of title will be one part of the process giving the prospective buyer and mortgage lender assurances there is a legal right to sell the property.
What is an Abstract of The Title?
An abstract of the title is a version of the history of a property. It will specifically look at ownership changes, whether through a traditional sale, foreclosure, tax sale, inheritance, or personal gift.
The abstract of the title document will also include any potential legal problems such as encumbrances, encroachments, liens, easements, and unpaid property taxes. It can also be referred to as the title abstract.
Who Does a Title Search?
A lender’s real estate attorney or title company will conduct a thorough property title search as part of the home-buying process.
The bank’s law firm could also refer the work out to a specific title examiner.
A title report will be generated from conducting the title search.
The title report will contain crucial pertinent information regarding a property. There will be a complete legal description of the property and info on the current taxes, property value, and zoning by-laws.
You can also expect the title report to contain released and unreleased mortgages, unpaid taxes, judgments against current or prior owners, and the chain of ownership.
Any legal issues will be discovered when you title search a property.
Outstanding title issues will be referred to as title defects. A title defect will usually need to be straightened out before the transfer of the title unless title insurance covers the problem.
Transfer of ownership can take place when there is a marketable title.
How Do Title Searches Work?
Your title search company will delve into the public records to find documents relating to the home.
They should locate documents that show the property’s rightful owner. They will also look for documents that show if anyone else has any legal claims or financial interest in the property.
When you search for a property title, the title agent will look at many different sources of documents to ensure the title is clear. These will include:
- Property deeds
- County land records
- Federal and state tax records
- Court judgments
- Bankruptcy filings
- Divorce cases
- Child support cases
- Death certificates
- Marriage licenses
The search should reveal any critical information that a buyer would need to know. Outstanding debts or liens and easements of any type should be indicated in the title search.
When you buy a home, you want the title search to return precise results that show the seller as the rightful owner of the house. They should put your mind at ease about any potential title problems later on.
To reduce potential risks of these sorts of issues occurring, a warranty of title can help, or a title insurance policy also offers you protection.
Doing a title search is a crucial part of real estate due diligence when purchasing any property.
What Title Agents Look For in a Title Report?
- Clerical errors – It is not uncommon for some administrative errors that could impact the legality of the deed.
- Encumbrances – an encumbrance will not stop a sale but could impact the value of a home purchase. A closer look to see precisely what the hindrance entails will be essential.
- Outstanding claims – as mentioned previously, it is not unusual to find outstanding liens placed against a property. Mechanics liens and special assessments are among the most common.
- Property disputes – Recorded property surveys may show something different than what was promised to a buyer. There might also be encroachments that need to be addressed for the home to close.
- Impersonation – although rarer, it is possible that a false identity was used to acquire a property.
- Building code violations – The property title could be impacted if the local government has acted against the current owner for violating local or state building laws.
- Municipal charges – if there are public services such as public sewer and water, water or sewer assessments could go unpaid.
What is a Clean Title vs. a Dirty Title?
A clean title is proof of property ownership with no claims against it. A dirty title, on the hand, indicates there are issues. Property searches are conducted to ensure a buyer does not purchase with a dirty title.
Examples of a dirty title include items from the list above.
What Are Deed Restrictions?
A search can also uncover any restrictions on how the property can be used. Deed restrictions can limit how much construction is allowed on the lot.
A restriction like this might be set by the city or county and is something you will want to know about before you purchase the home.
Other possible deed restrictions:
- Fence building
- The number and type of vehicles parked
- Consideration of the neighbor’s view
- Rules about adjacent structures
- Building approvals
- Number of bedrooms allowed
- If home businesses are allowed
- Restrictions on pets
- The external color of the property
As you can see, knowing the deed restrictions is very important before you sign the dotted line and complete closing.
There may also be a set of restrictive covenants providing guidelines on what you can and cannot do within the neighborhood.
These covenants are recorded in the registry of deeds.
Easements Can Be Present
The property title search should also show any easements. This is an easement if a third party has the right to access the property.
Sometimes this can be required by utility companies to allow access for maintenance. Other common situations include when a neighbor must cross the land to access their property.
If there are any easements on the title, you’ll want to know about them.
Boundaries Can Become Issues
The search should also include the property boundaries for the lot. Even when the boundary lines appear to be well defined, with fences or walls marking the limits of the property, there is still the potential for problems.
Disputes can quickly begin with neighbors over incorrectly positioned fences and even additions to the home. Even if this were the previous owner’s fault, the current owner would have to deal with the consequences.
When is a Title Search Done?
A title search happens when the lending institution orders a preliminary title report from either the title company or the real estate attorney representing the seller.
The title search is typically done early in the home-buying process but could be done anytime.
When a property is purchased without a lender, the title search could occur anytime before the scheduled closing date. It would be advisable not to wait until days before closing in case of a title issue.
If the title search is conducted right before closing and title defects are discovered, it could delay the consummation of the sale.
How Long Does it Take For Title Searches to be Completed?
The time it takes for the results of the property title search process to be reported depends on how complex the case is. Some searches need to source documents from many places, slowing things down.
In most circumstances, property searches will be completed in 10-14 days.
When all the documents have been found, reporting the results can take a few hours or weeks. It will also depend on how busy the title search company is and how quickly they can review the documents.
It would be best if you assumed it would take at least a week on top of the time it takes to collect the documents.
Older homes are more likely to have more documents, leading to a longer delay in completing this process.
New homes will have fewer owners, which will be an easier and faster job for the title company.
Whatever the age of the house you are buying, you’ll want to make sure the title company does a thorough job to avoid future problems.
When the process has been completed, you will receive a report based on the documents related to the property, highlighting any issues.
How Much Does a Title Search Cost?
Some people wonder if a title search is free. The answer is NO. It is not.
You can expect to pay somewhere in the region of $150 for a basic report but perhaps as much as $500 for a full in-depth report on ownership.
Costs will vary between states, and your required information is also a factor.
The cost of the search forms part of your closing costs. Examinations can also be required in other situations besides closing on a home, but this is the most common situation.
Can You Do Your Title Search?
Yes, you can do your property title search, but it is not advisable. A title search can be started by going online with the street address. You can also look using the search term land records and your state, and you should be directed to some online systems or local title plants.
If you want to reduce your buying expenses to a minimum, doing your search for property titles might seem like a good idea.
While you can do your title search, should you? Choosing to do it yourself requires a lot of work; however, if you miss something, the consequences could be expensive.
To do this, you will need the legal description of the property, which sets out the boundaries and will likely have been created by an attorney. The home’s legal description isn’t simply the address, so don’t make that mistake.
You’ll Probably Have to Go Offline, Too, For Property Searches
When you have the legal description, the next stage is to get the title deed information which will likely require a trip to the relevant courthouse.
If you are fortunate, this will be available online, but you must ride to the courthouse most of the time.
Property Searches Are Not Worth The Risk Without Professionals
The title and deed documents should also contain the owner’s name; you should write this down as you need it later.
You must also get property tax information from the county assessor’s office. You also want to find details of previous owners to make sure there aren’t any heirs or other relatives that could have a claim on the home.
Discovering if there are any court judgments on the home is also extremely important. Some fees might be associated with sourcing these court files, but this will reveal any liens on the property.
If you don’t uncover anything concerning, you have a clear title and can continue purchasing. How can you ensure you’ve not missed anything when completing this work?
If you aren’t used to reading legal documents or don’t know what you’re looking for, you could easily miss something crucial.
What is a Title Commitment?
The title commitment is the document that will be presented to a home buyer documenting the exclusions, requirements, and exceptions behind issuing title insurance on the property.
It will be issued when the property title searches are completed. It is also a guarantee you can get title insurance.
Without having a title commitment, prospective homebuyers won’t know about any unique legal characteristics of a particular property. You will receive a title commitment letter before closing.
What is Lender’s Title Insurance?
When buying a house for the first time, you will be introduced to the mortgage term known as title insurance. Like other forms of insurance, real estate title insurance policies can be essential.
Lender’s title insurance will protect the lender against title issues and other problems, such as a legal claim against the home.
A lender’s policy is usually required of all buyers when purchasing a house with a mortgage.
The lender’s title insurance will only protect the lender and does not protect the owner’s rights.
What is Owner’s Title Insurance?
When purchasing a home, having an owner’s policy is optional. Most real estate attorneys and possibly your real estate agent will recommend having owner’s title insurance.
The good news is there will be a one-time fee to protect you from legal issues with the title for as long as you own the property.
Owners’ title insurance will protect you from claims made if someone sues and makes a claim against the property before your ownership.
The cost of title insurance can vary quite a bit. You can typically expect to pay anywhere from $1000-$2000. The pricing of title insurance will vary based on the price of the home and the mortgage amount.
Pricing could also be influenced by the title search and any issues discovered on the property’s title. Title insurance will give a home buyer peace of mind if there are any legal claims.
Title Insurance Companies
You might be wondering who the most well-known title insurance companies are. Here are some of them:
- First American Title Insurance Company
- Fidelity National Title Insurance Company
- Old Republic Title
- Chicago Title Insurance Company
These companies are part of the American Land Title Association (ALTA). ALTA is the national trade association representing more than 6400 title insurance companies, title agents, independent abstracters, and real estate attorneys.
Title Search Near Me
Are you wondering where to get a title search?
If you want a title search on a specific property close to your current location, a Google search should help. You can search for who will do a title search near me or a title search company near me to find any local title companies or real estate attorneys specializing in title searches.
When paying cash for a property finding someone to handle the title search will be vital.
Massachusetts Title Search
Do you need a title search on your Massachusetts home? Feel free to reach out, and I will provide you with a referral to a real estate attorney who does title searches.
Final Thoughts on Property Title Searches
Hopefully, by now, you have a much better understanding of the purpose of a title search. The title search stage of the closing process might seem confusing, but it is crucial. Missing out on this process could lead to complicated and costly problems later on.
Now that you know more about this part of the closing process, it might not seem so bad if your closing date is pushed back because of it.
With more information about what happens during the closing, you should feel more at ease with the process and understand the benefits of the different stages. Property searches are a vital part of real estate.
About the author: Bill Gassett, a nationally recognized leader in his field, provided the above Real Estate information on what is a title search. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for 37+ years.
Are you thinking of selling your home? I am passionate about Real Estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.