What is a Title Search and Why Is It Important?

A title search can be defined as “[e]xamining deeds, land records and documents to verify the seller is the legal owner and there are no encumbrances affecting title.” (Black’s Online Dictionary, 2d. Edition). A title search is basically a snapshot in time of a specific real property showing the owners, chain of title, security instruments, and those parties having an interest in the specific real property being searched.

Why is having a title search so important?

Real estate tends to be the largest purchase that consumers make. If you are going to expend funds to buy a property for someone, it is important to have a title search to verify that seller actually owns the property and see which if any security instruments are recorded on the property.

Common Title Issues a Title Search Should Reveal

If the owner of the property or one of the owners is deceased, a title search will reveal whether an estate has been filed in the county the property is located. In the estate search, our real estate attorneys can contact the county’s clerk of court’s estate division to see if an estate has been opened, whether a will is or has been probated, and we will seek to identify the heirs that could have an interest in the property the parties are seeking to convey.

Another common issue a title search should discover is property division issues between spouses that were married when they took title to the property but have since divorced and never signed an updated deed. Sellers with a court order stating they own the property in terms of property distribution or divorce settlement but later can find out a deed was never prepared for the ex-spouse to convey the property over to the selling spouse. We have helped in such as scenario and it can be difficult for a party to ask an ex-spouse to sign a deed conveying their interest after their divorce decree was entered.

A title search is important to try to reveal which, if any parties, have a financial interest in the property. The most common interest is that of a lender with a mortgage whether a current or old mortgage that never got paid off, or an open line of credit. Also, a municipality that is owed taxes could have a right to payment. Other third-party interests would be assessments for utilities or a homeowner’s association, which would also need to be contacted for its annual dues, judgments against the owners of the property that would attach to the property, or a security interest such as a UCC filing which are typically found when home improvements have been financed by the owner of the property. It is important for your real estate attorney to make sure financial interests in the property at satisfied before or at closing when the property is transferred, or they can become an issue for the buyer because if if these financial interests of third parties attach to the property, they will have a superior interest to the new owner that will need to be settled before the parties release those interests. It would be problematic to buy a new property and later get a notice of unpaid liens affecting the property and/or a notice of foreclosure because the previous seller did not satisfy all HOA dues, mortgage lender security instruments, or county tax bills.

Easements and Restrictive Covenants

Another reason to get a title search is to get notice of any easements, restrictive covenants, or setbacks affecting the land. An easement is defined as “a right in the owner of one parcel of land, by reason of such ownership, to use the land of another for a special purpose not inconsistent with a general property in the owner.” (Black’s Online Dictionary, 2d. Edition). Basically, it means someone else’s right to use some portion of the property. Wouldn’t you want to know who, for which part of the property, and for what use?

Also, restrictive covenants could prevent the buyers or builders from doing what they bought the property for. Restrictive covenant can be defined as “a written agreement that limits the use of property for specific purposes and regulates the structures that may be built on it.” (Black’s Online Dictionary, 2d. Edition).

Title Search for a Commercial and Residential Real Estate Closing

When buying property, it is very important to, at a minimum, have a title search done to reveal who the owners are, who needs to be paid in order to clear the property title, and to make sure that the buyer is getting all of the interests and all of the property that has been agreed to. If a title search is not conducted, a buyer runs the risk of it later being expensive to try to clear up any title issues that would have been discovered in a title search or some could find that their investment is lost completely.

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