What is a Property Title Search?
Generally conducted after an offer to purchase real estate has been accepted, a property title search confirms the property’s rightful legal owner. While it may seem straightforward that a home seller owns the home, there could be hidden claims or liens on the property the homeowners themselves may be unaware of, making a title search essential for both buyers and sellers.
What is involved in a property title search?
As part of a property title search, a title company searches public records to determine the property’s ownership status and to find – and remedy, if possible and necessary – several types of ownership issues. A title search looks at a variety of records to find information about a specific property involved in a real estate transaction. Sources may include deeds, county land records, tax liens on the federal or state level, divorce cases, bankruptcy court records, and other financial judgments against an owner that could potentially attach to a property.
The property title search ultimately determines whether or not the property is free of liens and pending lawsuits, and if title ownership is accurately represented by the seller. A clean property title search means the buyer—and lender—agree there are no claims on the property that could become an issue after ownership is transferred. The title company will then complete a “commitment of title insurance” on behalf of either the lender or the buyer to ensure the buyer is receiving a clear title on the property and any outstanding issues are resolved.
Why do you need title insurance?
While a title search does due diligence during any property transaction, mistakes can be made and things can be missed. Oftentimes a home or piece of land has been owned by numerous people stretching back a century or more. Title insurance protects from possible errors, and from future claims or undiscovered interests. Such errors and claims might include forgery of deed documents, fraud, and mistakes in public records.
Title insurance protects from these unforeseen legal and financial title discrepancies, as well as the costs, attorney’s fees, and expenses of defending against those defects insured by the policy. Likewise, title insurance can protect a homeowner from financial loss if the sale of the home falls through due to a covered defect in the property’s title.
Because for many people the purchase of a home is the largest single investment that they will make, it makes sense to protect it. Just like a homeowner’s policy can protect against loss from theft or fire and wind damage, the home title insurance protects from hidden title hazards that threaten the owner’s financial investment in the home.
Types of title insurance
There are two different types of title insurance – an Owner’s Policy and a Lender’s Policy. An Owner’s Policy is purchased to protect the home buyer, while a Lender’s Policy is purchased on behalf of the lender before the home loan is issued. Both types of title insurance policies ensure a clean and clear title, protecting the insured from the financial and legal burdens of unforeseen title issues.
- Protects ownership rights from possible errors, and from future claims or undiscovered interests. Such errors and claims might include forgery of deed documents, fraud, and mistakes in public records.
- Protects the homeowner from unforeseen legal and financial title discrepancies, as well as the costs, attorney’s fees, and expenses of defending against any matter insured by the policy.
- Protects construction of a new home, which has the potential for exposure to unique pitfalls. It is likely that there were numerous owners of the unimproved land over the years who may seek to claim ownership rights. There is also the potential that the home’s builder failed to pay subcontractors or suppliers during the construction of the home, which could result in a lien being placed on the property.
In a highly competitive industry, Enterprise Title Services can help you. Contact us today.
