After you’ve researched a home and picked the perfect property, there’s yet another search to be done: the title search. While title research might not be as exciting as browsing through those listings or dreaming about moving in, it is a crucial step in a real estate transaction and can have implications for your purchase if it does. there are problems. Here’s what you need to know.
What is a title deed?
Title deed is the term used to describe the rights of the owner. It is not a document, like the deed, but rather “refers to the concept of property rights,” says Megan Hernandez, director of marketing and public relations at the American Land Title Association.
If you are buying a house, you want to make sure that the seller is the only one claiming the title. This confirms that there are no other claims or liens on the property, and that the seller, in fact, has the right to sell their house to you in the first place. This is where a title search comes in.
What is a title deed search?
A title search is the process by which a title company or lawyer examines public records to ensure that there are no claims, liens, or issues with one property that could lead to another person or entity to assert that they have an interest in the house.
“This research is being conducted to ensure that marketable title to the property can be obtained and that no charge affects the property rights of the purchaser,” says Sarah Stitgen, closing attorney at Cook & James, a Roswell, Georgia office.
Stitgen notes that a title search is mandatory for any real estate transaction requiring title insurance. This includes homes purchased with financing, as mortgage lenders require a title search in order to provide funds for the loan.
“Think of a home title search like an employer’s background check on a job seeker,” says Landy Liu, general manager of the home and title insurance and escrow departments at Better .com. “It also protects the lender. “
Who completes the title search?
A lawyer or a securities firm usually performs the title search, which is most often initiated after a contract has been executed by the seller and the buyer. However, the steps to follow may vary depending on the location.
“In New York, the research is done by independent securities firms,” says Greg Maybaum, a New York real estate attorney. “Once the contract is signed, the buyer’s lawyer usually orders the title search, and either that lawyer or the securities company provides the completed report to the seller’s lawyer. It is the job of the seller’s lawyer to manage and resolve title issues with the title company.
The business or lawyer usually does the detective at the county or town clerk’s office where the property is located. Many of the necessary documents are now available online, so the researcher often does not need to physically go to an office to perform the research.
“This person reviews many sources of information related to property,” says Suzanne Hollander, lawyer and professor of real estate at Florida International University in Miami, such as:
• County land registers
• Proprietary dishes
• Tax privileges (federal or state)
• Divorce cases
• Bankruptcy court files
• Case of approval
• Construction privileges
A thorough title search will likely also include details of any mortgages attached to the property, street and sewer assessments, taxes, and any other title issues present, Hollander says.
Once all of the information is gathered, the title company or attorney will create an abstract report that reveals what has been found regarding the title.
How long does a title search take?
The title search can take as little as a few hours, but in most cases it will take 10-14 days. In general, the older the house, the longer the title search. If there is a long cast of homeowners and transactions involving the property – a home equity loan against it, for example, or an earlier dispute over the property line – there is more work to be done to insure. that there is a clear title.
“Research can go back as far as 50 years, or as far back as needed to identify the root deed and examine each subsequent transfer of ownership,” says Stitgen. “This ensures that there is an appropriate chain of title from beneficiary to beneficiary, throughout the current owner. “
What if problems arise while searching for titles?
A title search may reveal one or more issues with the title. Here are some common headline issues, along with corresponding strategies for solving them:
• Break in the chain of title: This problem can appear when an act is missing in the chain. “If Party A passes ownership to Party B, then Party C passes the same ownership to Party D, we are missing the link between Parties B to C,” says Stitgen. “This can be solved by getting a Part B deed to Part C, or a Part B deed to Part D.”
• Incorrect or missing legal description on the act: depending on the nature of the error, this generally requires obtaining a corrected act from the same parties to correct the error. “In some cases an affidavit from a writer, preferably the party who drafted the document or saved the document, someone with knowledge of the transaction, may be sufficient to resolve the problem, but only if the error does not exist. is not material and does not change the nature of the legal description, ”says Stitgen.
• Potential Missing Interests: When the chain of title involves a transfer through an estate, it is essential to ensure that all heirs have properly relinquished their interests in the property. “If this has not been done, it will be necessary to obtain acts from these parties freeing their interests,” says Stitgen.
• Open Security Acts: Title search can uncover an open security document from the current or previous owner that has never been published. “If this is the case, research needs to be done to determine if this is left open in error. If this is the case, you will have to obtain a discharge from the holder of the guarantee title, ”advises Stitgen.
• Lien: A lien is a legal right or claim on property that is commonly used as collateral to honor a debt. A title search will often identify potential liens on a property. These will require further research to find out if the lien has expired, if it may not actually be for a party in the chain of title, or if it is a valid lien that needs to be paid. .
• Unpaid property taxes: Any unpaid property tax or “ad valorem” tax, which is based on the estimated value of the house, will need to be paid before transferring title to the new owner.
If one or another of these issues is detected, homebuyers typically have three options, depending on what’s allowed in their purchase agreement, according to Hollander:
1. Ask the seller to resolve the problem before closing.
2. Ask the seller to compensate the buyer for the cost of fixing the problem.
3. Walk away from the case and receive a refund for their deposit.
Cost of title services
There are a lot of expenses involved in buying a home outside of the actual price of the home, and the title search will be added to the overall tab. There are two main costs for securities services provided by a securities firm or lawyer:
1. Settlement Service Fee: These are the expenses incurred to close the loan, such as wire transfer, escrow, and title insurance policy underwriting fees. The latter includes the cost of searching for titles and the cost of resolving any issues discovered, according to Liu. The price for performing the title search alone is often between $ 75 and $ 100, and can be paid by the buyer or the seller if the parties agree.
2. Title insurance premium: “Title insurance guarantees the person who buys or refinances the house as the rightful owner of the property,” says Liu. “The premium is a one-time cost paid at closing that can range from 0.5% to 1% of the purchase amount. Since this is a percentage of the purchase amount, your premium may increase if your loan amount increases.
Can I do my own title search?
Anyone can search for property records through the county clerk’s office, and there’s no law that says you can’t do a title search yourself. However, experts strongly advise against trying to sort out the details of a title deed yourself.
“Title research requires knowledge of real estate requirements and lien periods and the ability to navigate a variety of courthouse files. It is not advisable to do this without experience, due to the complexity of recordings and indexing, ”says Patti DeGennaro, senior director of operations and process specialist at Title Alliance, Ltd., in Media, PA. .
Further, “if you want to purchase title insurance for your property, performing the title search yourself will not be enough, as the title insurer will require professional conduct, review and advise the search before issuing a policy. Adds Stitgen.
Anyone can search for property records through their county clerk’s office, but experts strongly advise against trying to sort the details of a title deed on your own.