What is a title search ?
Have you been wondering why it takes a long time to buy a house? This is because there are a lot of steps involved in the house buying process. Even after submitting your offer, the journey is far from over. One of the delays you will encounter will come from the title search.
So, what is a title?
Before we explain what the title search is, it is important that we understand the meaning of the title. A title is a legal document that specifies the owner of a property. The person or entity that holds the title is the only one who can legally sell the house. So, as a buyer, you must make sure that the house you are buying belongs to the seller and no one else can have a legal claim on the house.
This means that the seller must have the title of the property.
However, this is not enough to confirm the complete ownership of the property. This is when a process called a title search comes in.
So, what is a property title search?
The title search is the process of searching all legal documents related to the house that can affect the sale. In this search, all public records will be examined to determine encroachments, restrictions, liens, easements, or any legal document that can affect the title of the property. For example, if the house was bought as a tenancy in common, one of the owners cannot sell the house without approval from others.
>>MORE: Tenancy In Common: How Does It Work?
What public records are evaluated during the title search?
The search will evaluate all public documents related to the house. This is because one record might not have a complete history of the property or the most recent transactions on the property. To make sure that there is nothing left behind, all local public records will be searched.
As noted by Home Light, the following are some of the public records that will be focused on during the title search.
- Bankruptcy records
- Tax liens
- Deeds
- Land records
- Divorce cases, etc.
- Other financial judgments against the seller of the property
How much does a property title search cost?
The cost for a title search will vary depending on the nature of the search and the type of property.
As noted by Ownerly, the cost for a title search for a single-family home ranges between $100 to $250. However, this price can become much higher for a big building like an apartment complex.
Who conducts the search?
The title search will be conducted by a title company or an attorney after the mutual acceptance has been reached and the purchase and sale agreement has been reached, according to Investopedia, and Redfin. A mortgage lender can order a title search to avoid a loss of money on the property or legal action down the road. The cost of the title search will be included in the closing costs of the mortgage.
It is possible that a buyer can have a title search conducted independently. For example, if a buyer has suspicions about the seller of the property, he/she can pay a title company to conduct a title search. This could stop the buyer from moving forward ahead of time if there are issues associated with the title.
>>MORE: What Is A Purchase And Sale Agreement?
Benefits of title search?
It takes a lot of research and money to buy a house. Having thousands of dollars in down payment and more in mortgages is not easy for the buyer of the property.
This is why the title search is very important as it helps the buyer and the lenders.
The following are some of the benefits of the title search.
- Protection of the buyer’s money
- Protection of the lender’s capital
- Mitigation of legal claims
