What Is a Title Search for Property and Real Estate?
If you're buying or selling a property, then you’ve probably heard the term "title search."
Experts insist it’s a critical step, but what exactly is a title search? Is it really essential, or is it an arcane process that everyone has done in the past (so you should probably do it, too)?
Whether you’re a seasoned real estate agent, an investor, or a first-time buyer eagerly anticipating a new home search, understanding the whys and role of a title search is important.
What Is a Title Search?
A title search ensures that the seller of a property has a legitimate right to transfer the property through a sale.
Executing a title search, which is typically conducted by a title company or agency like Network Land Title, requires a detailed examination of public records to verify a property’s legal ownership. This includes identifying any hidden issues like liens, easements, unpaid taxes, or legal claims that might impede the sale. The review covers the property's ownership history, including who bought and sold it.
A title search is like a deep background check on the property. The goal is to find any potential issues that could threaten the buyer’s ownership of the property, and the lenders providing funds through a loan on the property.
How Does a Title Search Work?
A title agency or attorney goes through multiple steps in a title search.
- Search public records
The first step involves accessing public records to verify the property’s ownership history and identify potential issues. This includes examining deeds, tax records, mortgage documents, and court filings.
- Check for liens and claims
The title agency will search for any liens, such as unpaid property taxes, mortgages, or contractor claims, and verify that none are outstanding. They will also investigate and identify any legal disputes or lawsuits tied to the property or the people involved in the transaction.
- Verify ownership
The title search will ensure that the seller is the rightful and sole owner of the property. This includes confirming there are no unresolved claims from heirs, conflicting wills, or pending ownership disputes.
- Prepare a title report
After completing the search, the agency delivers a detailed report that covers the findings. If any issues are flagged, they’ll need to be resolved before the transaction can proceed.
- Title insurance
Title insurance is an optional policy that a buyer can purchase after the title search. It protects against future claims, disputes, or defects with the property’s title. This one-time investment, paid at the closing, safeguards the ownership.
The Dangers of Not Conducting a Title Search
Depending on the issue, not conducting a title search before purchasing a property or not conducting a thorough one can result in severe consequences.
- Unpaid liens
If the previous owner didn’t pay property taxes or fully repay a HELOC (Home Equity Line of Credit), the new owner may be subject to them. These liens are applied to the property and not the seller, which means the debt becomes the new owner's responsibility.
- Forged or flawed documentation
If documents in the property’s chain of title are forged, altered, or incorrectly recorded, the claim to the house could be called into question. An outside party may then be able to claim ownership of the property.
- Conflicting wills
A title search and title insurance can protect a property buyer from legal issues that might happen from inaccuracies in the property boundaries or other issues that may happen from the survey.
- Unknown heirs
An heir to the property could later claim ownership of the home, sparking costly legal battles.
The title search identifies potential issues like the ones above. When a title search isn’t conducted, the new owner of the property is at risk of unexpected legal and financial challenges, up to and including the invalidation of ownership.
Protect Your Property Investment with a Title Search
A title search isn’t just a formality; it’s a safeguard against legal risks, financial pitfalls, and ownership disputes. It streamlines the buying process and ensures a smooth transaction.
A title search provides peace of mind for home buyers. Buying a house is one of the largest investments, and legal complications or unexpected financial burdens from a title defect can turn a dream home into a nightmare.
For real estate agents, a complete title search is a critical step toward a successful transaction and homebuying process. Guiding buyers through this critical step can strengthen trust and credibility.
If you’re ready to protect your investment, have questions, or need further guidance, contact the experts at Network Land Title. We’re here to help answer your questions and protect your property investment.
