Why do a title search? | When does a title search happen? | What a title search shows | Title search cost | If problems are discovered | DIY title search | FAQs
What is a property title search?
A title search looks at public records to make sure there are no ownership issues or hidden debts that could interfere with the sale of a home. A home needs to have a clean title for a sale to go through.
Buyers hire a title company or a lawyer to perform a title search before closing. They look for claims like unpaid taxes, unpaid contractor debts, and various property restrictions.
Most title problems are related to simple oversights or clerical errors, but on rare occasions, a title search could bring up questions about who is the rightful, legal owner of the property.
Your realtor will be a great resource when it comes to answering questions about title searches — or recommending a great local attorney or title service.
- A property title search makes sure the property you’re buying doesn’t have any outstanding claims or liens.
- As a buyer, you’ll pay a title company or lawyer to perform a title search before closing.
- If your title search reveals problems, the seller will need to solve them before the deal can close.
Why do a property title search?
A property title search makes sure there are no hidden legal issues when you’re buying a home. It checks that:
- There are no outstanding claims or liens against the property.
- The person who is selling the property has the legal right to sell it.
Each time a property changes hands, the title must be transferred from the previous owner to the new owner to make the ownership change official. If the title has claims or liens on it, this makes things tricky.
What is a lien?
A lien is when someone you owe money takes a legal right in your property as a form of collateral. If you don’t pay your debt, the lien holder has the right to possess your property.
Claims or liens can be filed against a property for unpaid contractor work, back taxes, or even overdue utility bills.
A lien prevents the home from changing ownership until the lien is resolved. Think of it like a boot the city puts on a car with too many outstanding tickets, only in this case it’s a hold put on the title.
In other situations, the person selling the property might not actually have a legal right to sell. For example, let’s say a couple divorces. The home they live in is in the wife’s name, but in their informal split of assets, the husband ends up with it. If he tries to sell it, a title search will show that he’s not actually the owner, so the sale can’t go through.
In both examples, you’ll have to clear up the issues before a deal can move forward.
When does a title search happen during the home buying process?
The title search usually happens during the closing process; this is the period after the buyer has made an offer that’s been accepted by the owner, but before the deal is actually done.
Sometimes, a title search might happen before closing if the deal seems shady.
For example, if a property owner in severe financial distress offers a property to an investor at a price that seems too good to be true, that investor might reasonably suspect that there may be unsolved debts associated with the property.
These obligations could prevent the deal from taking place or follow the property and become the investor’s eventual responsibility.
In this case, the buyer could do an investigative property search — one intended to uncover any outstanding liens or debts, so they can be figured into the offer and the subsequent negotiations.
An experienced agent can help you identify risky properties like this before you make an offer.
What does a title search show?
A title search can uncover a wide spectrum of potential issues. Let’s go over some of the most common.
Failure to pay taxes can result in a tax lien, which prevents the property from being sold until the unpaid tax bill is settled.
Unpaid contractor debts
If you had your kitchen updated or home painted, but you failed to pay the contractor, they can go to the county courthouse and have a lien placed on your home. This lien won’t be removed until the contractor notifies the court that your debt has been settled.
Child support liens
In some states, unpaid child support can result in liens being placed on the offender’s property.
A deed restriction is a specific prohibition against certain acts, like building fences or cutting down trees. It could even limit the type and scope of additions you build onto the house.
Some properties come with specific allowances for public use written into the deed; these are called easements. Examples would be a publicly accessible path through a property to get to a beach or a utility access road.
Homes located in historic preservation zones often come with restrictions on everything from renovations to exterior paint colors. The title search would uncover these conditions.
How much does a title search cost?
A very basic title search costs around $75-250 in some places. This charge is incorporated into the title insurance cost, which is bundled into closing costs.
But keep in mind, the cost of a title search varies widely between states. The scope and extent of the search can also drive up the cost.
What happens if the title search discovers problems?
Any problems the title search reveals have to be solved before the deal can move forward.
Most of the time, this is straightforward: debts can simply be paid, ownership gaps solved and recorded, and liens removed.
Occasionally, though, a serious issue can paralyze or even blow up the whole deal. For example, if the title search discovered a previously unknown family member with a legitimate claim to the property, and neither party wanted to compromise, the deal could fall apart, since clear ownership couldn’t be determined.
At the very least, these situations will require the services of a good real estate attorney.
How to do a title search on a property yourself
You can do a title search yourself, but it takes time and it’s not easy, especially if you haven’t done one before.
There are two instances where it might make sense to do a title search yourself:
- If you’re paying cash for a property and won’t be required (by a lender) to buy title insurance, doing it yourself saves money, and clearing the title gives you some peace of mind.
- If you’re a lawyer, a private/insurance investigator, a journalist, or work in another field where you deal with document trails and government processes, you might do the title search yourself out of convenience.
Steps for doing a property title search yourself
So how do you do a title search yourself? Here are the steps:
- Get the title and deed for the property at the county courthouse. In most counties, you’ll have to go to the courthouse in person to obtain these documents; they don’t give them out online.
- Look for an unbroken chain of ownership. On the deed, there should be an unbroken chain of owners. For example, if John Smith bought the house in 1995 and is selling it to you now, his name should be on the deed. When there are gaps here — for example, if someone else’s name is on the deed, this could signal improper transfer of ownership.
- Visit the county assessor’s office for the property’s tax assessment information. These documents will show how much tax is assessed on the property and how much has been paid. If there are outstanding property taxes due on the property, you may be responsible for them if you buy the property.
- Search each owner for outstanding legal claims and judgments against them. Look at online county court dockets, though if you do find a case involving them, you’ll probably have to pay to access the case file.
Any unsettled claims against the property would be your responsibility once you became the new owner, so it’s important to do a patient, thorough job here. You may also want to search for heirs or other relatives who might have claims to the property.
If you don’t find any claims, liens, gaps, or problems, you probably have a clean title. We say “probably” because, as you can see from the process, it’s possible to miss something. That’s why people buy title insurance — to protect themselves from any unknowns that weren’t discovered.
Get peace of mind with your title search with a quality agent
Buying a home is tricky, and with home prices perpetually rising, there’s a lot of money at stake. That’s why we recommend paying a title company or lawyer to do your title search for you. Yes, it’s an additional cost, but knowing your investment is sound is worth it.
We also recommend working with an experienced agent to make your home-buying process easier.
FAQs about property title searches
What is involved in a property title search?
In a property title search, a title company or lawyer will look over all legal documents for the property to check for claims or liens. If the property owner owes a debt, for example, someone else may have legal rights to the property until that debt is paid. If the title is clear, the sale can go through. But if not, the seller will need to take care of their debts first.
How do I do a property title search?
To do a property title search, get the title and deed from your county courthouse to check for a broken chain of ownership or other claims on the property. You might also look for tax documents from your county assessor's office. Finally, see if there is any pending legal action against the owner by searching your county court dockets.
How much does a property title search cost?
Prices for a property title search generally start around $75 and go up from there. It will cost you more if you get a more in-depth search that includes multiple properties or land parcels.
Want to learn more about what happens during the home-buying process? Check out this related content.
Seller Closing Costs: Here’s Everything You Need to Know: It’s an open secret that selling a house is expensive; between home staging, renovations, and real estate commission, you could be spending five figures before you see a penny of actual sale proceeds. Here’s the definitive guide to how much it costs to sell a house, and where all that money is going.
Transaction Coordinator Vs. Real Estate Agent: If a transaction coordinator coordinates a real estate transaction, what does a real estate agent do? Do they both perform the same job, under different titles, or do they offer different services? Our definitive guide compares and contrasts the two, and reveals some intriguing surprises.
How to Sell a House by Owner: All the Paperwork You’ll Need: Gathering and properly filling out the stacks of paperwork necessary to sell your home is probably the most challenging part of the FSBO experience. Luckily, we’ve put together this comprehensive checklist of all the forms you’ll need to gather before your home sale is finalized.
Leave a Reply