If you’re buying a house, you probably can’t wait for your closing appointment. After all, this is when you get the keys to your new property.
Unfortunately, you can experience delays in your closing or issues that cause the deal to fall through. Did you know that 9% of all delays and lost deals occur from title issues?
Image by Harry Strauss
A title search on the property helps you prevent many issues, but do you know how or why? If you don’t understand what a title search is or why you need it, you’ll want to learn if you’re buying a house.
If you would like to understand these things, read this guide to learn everything you need to know about title searches on properties.
The Basic Principles of a Title Search on Property
A title search is something that occurs with almost every real estate sale, and it’s a task the buyer completes. You can do a title search yourself, but it’s better to hire a company to do it.
A title search consists of several primary things. First, it is a tool people use to prove the legal ownership of a property. Secondly, it researches the deeds to properties to determine what they contain.
Title companies perform these searches when people hire them, and they also provide title insurance for their services. Title insurance is something you pay for once, but it lasts as long as you own the house.
When you have title insurance, the title company takes the responsibility for the work they performed during the title search. If they missed something that causes problems, they will pay for the necessary costs to fix the issue.
Reasons You Need a Title Search
As the buyer of a real estate deal, you need a title search for several reasons. Here are some of the primary reasons:
Your Lender Requires It
When lenders issue mortgages, they generally require title searches. A lender doesn’t want to give a person a loan to buy a house if the house has issues.
Therefore, you’ll need a title search if you plan on getting a mortgage loan. If you’re paying cash for a house, you won’t have a lender dictating demands like this, but it is still imperative to get a title search when paying cash.
It Helps You Prevent Problems
A title search tells you valuable information. One essential thing it reveals is the owner of the house. If a person tries to sell you a house they don’t actually own, the title search will catch the problem.
The search also tells you if the property has liens on it. A lien is a legal tool that provides ownership rights to someone. A mortgage lender is a lienholder when they issue a mortgage on a home.
Other businesses or entities can also place liens on properties. If you buy a house with liens on it, you become responsible for the liens.
It Places the Responsibility on the Seller if They Find Issues
If you perform a title search and find liens on the property, you can hold the seller responsible for settling these issues. By doing this, you won’t have to deal with them later.
If you don’t catch the issues when buying the home, you’ll be stuck with them when the issues come into the light.
Other Things a Title Search Reveals
A title search not only reveals all the details listed so far, but it also tells you other things about a property.
Title searches tell you the size of a home, the number of bedrooms it has, and the number of bathrooms. It tells you the physical address of the home and the property description.
A property title also reveals if the land has easements. An easement is a legal tool that allows other people to use part of the property for a specific purpose.
For example, if a cellphone company has a tower behind the property, you might find an easement on the title that lets the cellphone company access the tower by driving on part of the land.
How to Perform a Title Search
The best way to perform a title search is by hiring a company to do it for you. To find a company, you can contact the national association of realtors or look up a national real estate title search.
Title companies perform searches by researching public records. Public records show the details of every real estate transaction. They tell you who owns the title to a home, and they show the liens on homes.
These records show the history of a home, and title search companies find the information by checking deeds, land records, bankruptcy cases, judgments, and much more.
Again, if you hire this out and the company doesn’t detect an issue, they will pay for the costs of fixing the problem if an issue arises that they missed. That’s why you need title insurance.
The Effects of Issues With a Home Title
Suppose you’re trying to buy a house, and you hire a company to perform a title search. If they find out that a contractor placed a lien of $15,000 on the property, you’ll owe this money unless the seller pays the bill.
If the seller refuses to pay the bill, you can back out of the deal if you wish. If you decide to go ahead and buy the house, you’ll owe the money.
Imagine if you skipped the title work, though. If you ever try to sell the house and the lien shows up, you’ll be the one paying the bill.
Title Searches Are a Standard Part of All Real Estate Sales
Most people hire companies to perform a title search on a property before they close on it, and now you can see why this is an essential step.
If you enjoyed learning about title searches, you might enjoy other topics on our blog. Check it out today!