A property title search determines if there are any liens or encumbrances that may have been transferred with a property's title from buyer to buyer, a critical bit of information to know in the home-buying process. Since most properties have had multiple owners, you will want to check to make sure the title is free of any problems before purchasing.
Checking the Title with the County Clerk
An accurate way to check a property's title is to go directly to your county clerk's office and receive public records. Start by obtaining the property's address, along with its legal description. The legal description is important because street addresses can change, but legal descriptions remain consistent on a surveyor's report or a previous/current deed to the home. Your county clerk's office of land or real property division can help you obtain this description, as well as locate the title. Most often, you will be asked to fill out a standard title search form and charged a small fee for any copies or hourly use you need. You will then have a complete list of all property ownership transfers, starting most often with the original owner, to review.
Utilizing Online Records
Many public records also can be found online with free public records search engines. However, be aware that these might not be fully updated and may not contain complete information. Some search engines also rely on users to input data, so they should be used as a starting point only.
Escrow Companies and Title Insurance
In addition to performing title searches through public records yourself, you likely will be offered a title search in your home buying experience from an escrow company. These companies also offer title insurance for a fee that protects your home investment against any liens or encumbrances that were not found during the title search. Without this title insurance, you run the risk of later finding out that the title has a lien or encumbrance that could cause you to lose ownership.
In order to safely proceed with your home purchase, you need to know what to look for when examining previous ownership transfer. Make sure that the property's title is free of any liens that could compromise your home investment. A lien is a debt where the property was used as collateral in the case of non-payment. These are usually either tax liens for unpaid property taxes or mechanics liens for unpaid labor or materials used in improving the property. Outstanding liens could both burden you with debt and prevent a legal transfer of the title.
In addition to liens, you also want to check for any encumbrances on the title. These, by definition, are claims or liabilities against a property by another party. In short, they can restrict a free -- and unencumbered -- use of the property. Though often people use liens and encumbrances interchangeably, the difference is that a lien is a monetary debt while an encumbrances can be a number of things: developer/subdivision covenants, an easement that allows another party access to the property, or an encroachment where part of a property extends illegal beyond its legal building lines, usually in the form of a fence, driveway or deck.
In order to ensure a smooth and worry-free title transfer, you should be sure that the property you want to buy does not have any of these issues, or that the seller is going to clear them up and deliver a "clean" title to you by the closing date. If you have any questions along the way, consult with an real estate attorney.
- Modern Real Estate Practice: Galaty, F., et al.
- Zillow: Title Insurance for the Buyer
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