How Does a Property Title Search Work

By
Real Estate Agent with RE/MAX Executive Realty 91362

Your search for a new home might have been difficult, but the problems may not be over when you sign a purchase agreement with the seller. There are still be many stages to navigate your way through before you own the house, and one of those is the title search.

A property title search is vital to ensure the sale is legal. We will take a comprehensive look at what you need to know about title searches when you're buying a home.

What Are Property Titles?

A property title isn't simply a document that shows who owns a particular home; instead, it is more to describe ownership rights.

Naturally, when you're buying a home, you want to be sure that the person you are paying money to is the actual owner. The seller should be the only person or entity with the right to sell the property.

You also want to ensure that nobody else has any claims or liens on the home. A property title search should provide you avoid potential ownership problems.

What Are Title Searches?

The title search is the stage in the buying process where a title search company or real estate attorney is used to research public records. They will look at all the available documents to try and find if any other entity has any claim or if they are liens issued against the property.

If they do find something, it could mean that property ownership could be challenged later on. The search should ensure that the rights of ownership of the new buyer are not at risk in the future.

Title searches are generally needed when a home purchase requires title insurance. Usually, any homes purchased with help from mortgage companies require title insurance before the funds are released. The reason for this is that the lender wants to protect their investment.

It is a part of research when buying a house that you'll never want to skip.

Who is Responsible for the Title Search?

Often a specialist company will take care of the home title search, but attorneys can also do the necessary research. This stage typically begins when contracts are signed between the buyer and the seller, though the exact process involved to complete the search will vary depending on location.

The title search company will undertake the research, which can be mainly done online, though sometimes some records are only available at county clerk offices.

There are many resources to search to define the property’s title, and they include:

  • The deeds
  • Land records
  • Property plats
  • Court records for bankruptcies and divorces
  • Probate cases
  • Tax and construction liens
  • Court judgments

Usually, this search will include information on the seller's mortgage, tax issues, title problems, and street assessments. An abstract report can be generated using all this information about the title.

How Long Do Title Searches Take?

You should usually expect a title search to take up to about two weeks, though in some cases, it might take just a few hours. Typically, you can expect searches to take longer for older properties. This is because the home would have had more owners and more details to check.

With a long list of owners, there could have been many more opportunities for disputes and reasons why there could be challenges against the title.

Property title searches can go back and look at records from decades ago to ensure there is a clean line of transfer between owners. This should ensure that the current owner has legal ownership of the home to sell it to a buyer.

If a Problem is Found with the Title, What Happens?

Title searches can uncover many different types of problems with many different solutions. Let's take a look at some of the more common issues.

Breaking the chain

It might be discovered that a deed is missing in the chain of ownership. To resolve this problem, deeds will be sought from other parts of the chain to confirm valid sales.

Losing interest

If the title has transferred as part of an estate at some point, they will need to check whether the heirs have relinquished their interest in the home. If this hasn't happened, the heirs will need to be contacted to release their interest in the property.

Errors and omissions

Mistakes or missing information in the legal description in the deed. If this is the case, it might be possible to contact whoever it was who drafted the contract so that they can help fix the issue. Typically this will only work for relatively minor mistakes, however.

Liens on the property

If a lien is found to be on the property, it will need to be cleared up. It could very well be the case that this lien has expired, but if not, there could be money to pay to resolve this issue.

Taxes

Unpaid property taxes will need to be covered before the title is transferred to the new owner.

Security deeds

There is a current security deed on the property if it's found that hasn't been released. This release needs to be secured before the home is bought by someone else. Otherwise, the owner of the security deed can potentially foreclose the property to recover the loan amount.

How Much do Title Searches Cost?

There are many expenses involved in buying a home on top of the actual money you give to the seller. And when you hire a title search company, the costs will be split between settlement service fees and insurance premiums.

A title search can cost around $100, and the title insurance can cost between half and 1% of the purchase value. Though unlike other types of insurance, this is a one-off cost.

Is it Possible to Do Your Own Title Search?

While anyone can search property records, it isn't necessarily a great idea to try and do a title search yourself. While you might think you’ll save a lot of money taking this option, you could end up costing yourself a lot more in the long run.

Unless you have an excellent understanding of real estate law and lien periods, you could miss things in court records. These documents tend to be rather complex, and if you make a mistake, you could think the record is clear when it actually isn't.

When you are getting a mortgage, the lender will not accept your title search anyway. They will need and expect a professional title search company or attorney to carry out the work to ensure there are no potential ownership problems later on.

Final Thoughts

Having a title search done is vital for the home buying process. While getting title searches done are mandatory when getting a mortgage, when paying cash, it should also be done. Skipping out on a title search could be a disastrous financial mistake!

Hopefully, you now have a better understanding of how a title search works.

Posted by

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

Comments (1)

Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Bill - yes, singing the contract is the end of one phase and the beginning of another.

Dec 18, 2021 10:36 AM