If you’re looking at buying a home, you’ve probably heard the term “property title search” thrown around a few times. Especially if you’re a first-time buyer, you can be forgiven for not knowing what it means or exactly what is involved in a property title search.
Property title searches are really helpful, but they’re a lot of work. We’ll go through everything you need to know about them.
What Is a Property Title?
A property title is a legal way of stating who owns the rights to the home. This is not to be confused with deeds, which are the actual legal documents that transfer title from seller to buyer.
It all sounds pretty straightforward, but it can get complicated. Only the person who owns the rights to the home has the right to sell it. So in instances of divorce, if only one partner is on the title, only they can sell the home.
Additionally, if there are liens on the property, this will affect the rights to sell the home. This is where property title searches come in.
What Is a Property Title Search?
The clue is in the name. A property title search is a search for documents on a given property. This is because the property title may not contain all the information a buyer may need, such as a history of the property and any liens.
A property title search is a comprehensive search. It goes through many different records and sources to uncover all the information you need. Most importantly, it reveals if anyone besides the owner has a claim to the property.
What Is Involved in a Property Title Search?
As we mentioned above, a property title search uses many sources. This includes:
- Deed restrictions
- Federal and state tax liens
- Bankruptcy records
- Financial judgments
- Divorce and child support cases
All this information is collated and returned to the buyer, with any potential issues highlighted. We’ll dive into a couple of them a little deeper.
Deed restrictions will be included in a property title search. These tell you if there are any limits to what can be done to the property. There’s a lot of different types of deed restrictions, but the most common ones include:
- Easements and boundaries
- Obstruction of neighbor’s view
- Vehicle types and numbers
- Building approval
- Home business allowances
- Pet restrictions
- Adjacent structures
Easements are particularly important to know about. If you have a property that stretches across a road or has access to utilities, for example, you’ll need to allow access to your property. While that’s no big deal, for some buyers, it’s a liability and hassle they simply don’t want.
Similarly, ensuring you’re informed about your property boundaries is important. Usually, it’s pretty straightforward, but if construction mistakes have been made, things can become more complicated fast.
Tax liens are quite simple to look up but very important.
If there is a federal or state tax lien upon the property, then the government has a legal claim to the property. This is bad news for sellers and buyers, as it means this would need to be resolved before any progression through the chain.
Bankruptcy Records and Financial Judgments
Closely related to the above, ensuring the owner and property are free of judgments and liens protects your purchase.
Judgment liens mean a court has ruled that a creditor may hold possession of the property if the owner does not meet certain payment obligations. Again, these can halt the progression of property sales.
When Would You Get a Property Title Search?
Property title searches are usually conducted in the closing process. This would be after an offer, but before the formal transference of ownership.
This wouldn’t be the case with all properties. For those investing in property, often, it is prudent to conduct a property title search at the earliest opportunity.
Who Conducts a Property Title Search?
Most often, a title company or an attorney will carry out a property title search.
In theory, you can conduct a property title search yourself. But the reason the vast majority of buyers opt not to is because of how time-intensive it is. It also takes a fair amount of legal know-how and experience.
You’ll need the legal description of the property, which is generally prepared by an attorney anyway. Then, you’ll need to locate the courthouse and ask for the title and deed information of the property. Next up is the county assessor’s office to see the clerk for tax assessment information on the property.
This is followed up by vital records of previous owners to ensure no one else has a claim to the property. Finally, you’ll need to find outstanding court judgments by searching through court dockets. Quite the list, isn’t it?
All this is to say, you can do it. But you need to make sure you do it right. If you can’t put the time in, your best bet is a professional.
How Much Does a Property Title Search Cost?
This varies from state to state and is dependent on the amount of information you’re after. A land report starts at around $150 while an ownership and encumbrances report can be up to $1,000.
Generally, it is the buyer’s responsibility to pay these fees.
What if There Are Problems?
It happens, don’t worry. You won’t be the first or the last buyer to have problems come up from a property title search. The good thing is you’re aware, that’s half the battle.
If it’s uncovered before closing, there are a few things you can do. You can ask the seller to pay the debt they need to clear the title. If the seller can’t afford that, you can begin negotiating on the house price with them.
If you’re unable to reach an agreement with the seller, you can walk away from the deal entirely.
Go With a Leading Title Search Company
Hopefully, you now know what is involved in a property title search. If you’re looking for a national title search vendor or a bulk title search vendor, look no further.
Just get in touch today for product demos and more.