The deed to property is one such document. It includes important information regarding the specifics of the property. Transfer of ownership of the property will be reflected in the deed, and sent to the new owners shortly after completing the closing process.
The information included in this document can have long-lasting effects on the property, enough so that title insurance is often required to protect against potential issues. An essential aspect of purchasing title insurance — and a great practice of due diligence before purchasing a property — is to perform a title search.
Many first-time buyers are unaware of title searches and the benefits they provide, so we thought we’d look into this important process a little further.
We’ll answer the most pressing questions regarding title searches:
- What Is a Title Search?
- How Is a Title Search Performed?
- Why Is a Title Search Important?
- What Is the Timeline of a Title Search?
- How Can a Real Estate Title Company Help?
What Is a Title Search?
It’s generally assumed that the person selling a property has the legal right to do so. However, it’s not always as clear cut as that. Properties can occasionally have certain encumbrances on them that add complicated layers.
A title can be encumbered by a lien, which will transfer to the new owner after a sale. A lien is a legal claim on a property by a third party. This mechanism is put in place as a guarantee the third party will receive payment.
This encumberance is one example of the potential title issues that can complicate matters after you purchase a property.
A title search involves a real estate title company or attorney seeking out these problems and attempting to rectify them. A second goal is to verify that the person selling the property has a legal right to do so.
How Is a Title Search Performed?
Public records contain a wide variety of information. Government agencies conduct studies and make their findings public. Private companies and citizens keep updated logs of various types of information including the sales history and encumbrances associated with a property.
A real estate title company or attorney will perform an investigation of these public records regarding the property in question. Their goal is to find any outstanding financial or legal clams.
A legal chronology of the property will be constructed. This chronology includes a list of all previous owners and sales, past surveys of the property, easements, and any lawsuits associated with the property.
The attorney will also put together a series of legal documents to prove the seller is, in fact, the owner and legally able to sell the property.
Outstanding property taxes, liens, or easements can be found during this process. The existence of these things can have drastic impacts on the new property owner after completion of the sale. It’s in their best interest to have a full understanding of the property before closing.
A title insurance policy can protect against future findings of this sort in the future.
A failure to address these issues prior to closing will leave the buyer responsible for these previously-unknown considerations. Addressing these issues can sometimes be quite expensive and a lot of work.
A title search will ensure that the sales process is legit — first in that the seller has a right to engage in the transaction, and second in that there aren’t unknown encumbrances that will negatively impact the buyer at a later stage.
What Is the Timeline of a Title Search?
A title search is generally performed prior to closing on the property. The lender will likely request a title search. However, a buyer can request a search at any point in the process.
The speed at which the process takes place and the cost of performing a title search will vary on every property. This cost will be determined by factors such as the age of the property and the amount of activity regarding sales and encumbrances.
Newer homes simply won’t have as much documentation. A real estate title company or attorney will carefully go over everything in question. This is a detailed process and it’s in your best interest that these persons are thorough in their reporting.
How Can a Real Estate Title Company Help?
Technically, anybody can perform a title search. A homebuyer can go visit their county’s Register of Deeds Office and find all of the public records available on the property in question.
However, this type of a visit is not recommended. These are legal documents that take specific training to thoroughly understand. A title search is a potentially very important step on the way to completing a property sale, and you don’t want anything to be overlooked.
A real estate title company or attorney will have the knowledge and expertise needed to not only know exactly what to look for, but how to interpret it when it’s found.Rochford Law & Real Estate Title has been helping the citizens in and around Nashville, TN navigate the process of buying and selling property for over two decades.