What is a title search? How do you do one? Who can do them? Why are they needed, what do they cost, and how fast can one be done? Read the blog here to learn about how to do a title search.
What do you look for in a title search?
Let’s start off by stating this – every professional title searcher (“abstractor”) does four specific tasks in a title search. They are listed below with some sample results of what to do with what is discovered in each.
1. Verify the deed chain is unbroken
This means the searcher hops on the county recorder’s computer and scrolls back on the property’s log to a start date. The start date is dependent on the length of the search, which is dependent on the purpose of the search. Are you buying the property, refinancing the property, or other? Each purpose requires different search lengths. The length could be just as far back in history as to the date the current owner bought the property, or it could go completely back to patent, which is the date the US government first sold or granted the land to the first private owner.
The searcher then works his way forward to the present, listing all unexpired documents found of record, and then crossing each off the list if a release document is found for it.
Each signer of a deed as a buyer must be verified to have signed off as a seller on the subsequent deed, and so on. If buyers have died or divorced, documentation of these events must be found and noted. In this way, all buyers and their spouses are documented to have sold or “conveyed” their interests. When all parties are verified to have done so, the chain of deeds is considered unbroken. That’s good news, and means the parties listed on the most recent deed are likely the rightful owners. We say “likely” due to the possibility of title defects affecting ownership – defects are ‘hidden’ issues that cannot be found in a perfect examination of title records. Read the blog to know more about title defects and title insurance here.
If a break is found in the chain, that means the searcher could not find any recorded document showing that a buyer somewhere in the chain failed to sign as a seller on the next deed. This needs to be “fixed, or “closed”. How? Find that original party, or their heirs if deceased, and get them to sign a deed of correction.
2. Identify the legal description of the property – this is not an address.
An address is used for US mail, 911, maps, etc. On the other hand, a legal description uses very specific language to identify the property being sold. There are two types of legal descriptions:
- First is “Block & Lot” or “Plat”. It is short and sweet. Example: Block 5, lot 72 of the Gleneagles Subdivision as recorded in Plat Cabinet 605, Slide 56 in the office of the Fayette County Clerk, Lexington, Kentucky. Commonly referred to as 123 Pretty Street, Lexington, KY.
- Second is “Metes & Bounds”. This is typically for all undeveloped property, and is lengthy. It is in paragraph form and refers to landmarks (that may not exist anymore), distances, and directions of the compass to define the property’s boundaries. Example: Parcel-1. Starting at a point marked by an iron pin, Southwest of the intersection of KY HWY 169 and Beckley Road, then commencing in a Southerly direction, 270 degrees, 27 minutes for 150 feet, then in a Westerly direction 185 degrees, 42 minutes for 1,075 feet to an iron pin, then…arriving at the point of origin.”
Where either type of legal description can become problematic is when a parent tract of, say, 1,000 acres has had many sell-offs over the years (to individuals or to neighborhood developers), and now the owner of the parent tract tries to reconcile its boundaries by subtracting off the sold-off parcels’ boundaries to derive a description of what’s left – the remaining portion. This remaining portion gets surveyed, and errors are then discovered: An error has been made in one or more of the previously sold-off parcels such that the remaining portion of the parent tract “does not close”. Meaning some bit of the boundary is not where it’s “supposed” to be – The remaining bit is too small or too big, or someone has built over the boundary in error, or other. To fix such issues, several surveys must be redone and then negotiations with neighboring persons or businesses are held, at some time and expense to some or all. Hopefully, the issues are resolved peacefully without litigation.
In a case the author is familiar with, a huge farm sold off some parcels on its fringe, that was along a major road, and one was to a gas station. Many years later, the remainder of the farm was developed into a hotel and golf course. 50 years later, the gas station discovered its legal description extended back into the golf course, deep into one of its fairways; the gas station’s legal description was made too large, in error, all those years ago. This was discovered 10 years ago, and after a costly and lengthy legal battle, the golf course was forced to remove a large portion of one of its holes from the gas station’s land. The golf resort had to redesign its layout, shrinking its overall length and public appeal.
3. Identify ownership rights. Who owns the property?
If the search reports that the deed chain is unbroken, then the most recent deed of record shows the property owners. Now you must ask these questions:
Are the owners individual persons or an entity? If individuals are any or all alive or dead? If dead, did they die with a will or without? Has the will been read in probate court? Did the will name an executor, and who did the probate court actually appoint as the executor? Other questions include: What is their marital status, and are you in a marital rights state? Are any of these individuals a minor? If so, a court-appointed guardian must be appointed.
If owned by a corporation, you’ll need to get a corporate resolution that states who has authority to act on behalf of that entity. Escrow companies will have sample forms to use in all of these situations.
If the entity is a trust, then get a copy of it and read who the trustees are. If the entity is an estate, get the probate document showing who they appointed as executor.
4. Identify documents that give non-owners rights to property access or sales proceeds.
Format
A searcher will search the property log for recorded documents. However, beware, there could exist perfectly valid and enforceable written agreements that have not been recorded yet. There could also be verbal agreements that are binding as well. For example, farming agreements, shared-driveway agreements, etc. In waterfront communities, there could be verbal agreements to share the dock’s use and maintenance expenses. Seek legal counsel to determine if any such agreement is still valid.
Access/Use
Usage agreements are typically in the form of a recorded easement. This is a document that typically describes the purpose and portion of land that can be used or accessed by the easement holder. An example would be a utility easement for the electric company to service their power lines. It could also be for the public to cross your land to get to the beach, or for a neighbor to use a defined “lane” through your land to access theirs.
Receive funds from the sale of the property before the owners receive any funds
These rights are detailed at length in mortgages, liens, and judgments. All give the holder the right to stand in line when the property sells, to hopefully collect the funds detailed in the document. Any lienholder can force the sale of a property through a process called foreclosure. When any property sells, for any reason, liens are paid off in the order in which they were recorded. Chronologically, first to last…or, at least, until there are no more sales proceeds. If there is not enough proceeds to pay off all liens, there will be some negotiation between all lienholders before the foreclosure sale. This negotiation may result in some lienholders getting reduced sums, and others not getting any funds at all. This is called a short-sale – when a property’s sale cannot produce enough funds to pay off all lienholders.
These are the major items a searcher looks for in a title search – a search of a property’s records at the county recorder’s office. A title & escrow company and/or legal representation can help you resolve the issues detailed above.
