Property Title Search: What It Is And How It Works
Andrew Dehan4-minute read
November 07, 2023
Buying a house is an exciting milestone, but it requires several legal steps – from making an offer to signing legal documents at a closing table – before you can officially become a homeowner.
Each step is a crucial part of protecting your future investment. A few critical steps include getting an inspection, a home appraisal and a property title search. Let’s explore the importance of a property title search to see how getting one can protect you and your investment in your new home.
What Is A Title Search?
When buying a home, you’ll likely assume the seller is entitled to sell the property. However, that assumption can have heartbreaking consequences if someone else with a claim or lien on the property knocks on your front door.
A property title search examines public records to confirm a property’s rightful, legal owner. A title search should also reveal any claims or liens against a property that may affect purchasing it.
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Why Do I Need A Title Search?
Finding out who owns the property you want to buy is just the first step. The current owner may not even be aware of an old claim(s) on the property’s title. A previous owner’s debts can become your responsibility because mortgage liens and similar debts – as well as easements and restrictive covenants – follow the property, not the owner.
Encumbrances like unpaid property taxes, homeowners association (HOA) fees and unpaid bills for previous home improvements may become your responsibility if you skip the title search – or the title search fails to uncover it. That’s why mortgage lenders require title searches and title insurance as part of the mortgage underwriting process.
How Do Title Searches Identify Who Owns A Property?
A title search digs into a property’s public records. Typically, an attorney or title company will use a variety of legal documents to establish a chain of title and confirm that a seller is the rightful owner. And the title search also roots out any financial or legal claims against the property.
The title abstractor is a professional who conducts the title search by examining public records. They pull together all the relevant information and legal documents they can find on a property to prepare an abstract of title. The abstract of title includes a recorded chronology of all available documents and transactions related to a property.
The abstract may include the current and previous owners, past property surveys, easements that cross the property and any wills or lawsuits connected to the property.
A title search can uncover financial rulings against the property’s owner that may affect you financially in the future. Some potential problems with the title may include outstanding property taxes, liens against the house and easements. Outstanding claims may threaten your happily-ever-after in your new home.
Your house title search must indicate clear and free ownership of the property. Otherwise, you may be in for a rude awakening down the road.
Fortunately, you can mitigate the potential risk of a claim on a property’s title. For example, you can purchase title insurance or secure a warranty of title. The one-time purchase of a title insurance policy can help protect your ownership claim to the property, making the expense (usually 0.5% – 1% of a home’s purchase price and folded into your closing costs) worth the price for many home buyers.
Who Conducts The Title Search?
A title company or attorney typically takes care of the title search. In some cases, a lender or home buyer may conduct the title search.
If you tackle the title search yourself, you can find the records you’ll need at places like the county courthouse, recorder’s office and assessor's office.
It may be a good idea to let the professionals – such as real estate attorneys – handle this part of the home buying process. Legal documents can confuse the untrained eye, which may cause you to overlook something important.
How Long Does A Title Search Take?
The speed of a title search will vary based on the complexity of the documents associated with a property.
A title search will involve obtaining records from multiple sources, which can delay the process if an office takes a long time to respond.
Once the documents are in the hands of the title company examiner or attorney, it may take a few hours or weeks to pore over the paperwork and uncover any outstanding claims. But title searches typically take 1 – 2 weeks to complete.
Old Vs. New Homes
A newer home typically has fewer documents to research than an older home. An older home will likely have more records to review because it’s been on the market longer. And that can prolong the title search.
Although waiting can be frustrating, you shouldn’t rush your attorney or title company examiner. Allow them the time they need to do their job thoroughly to help you avoid any issues with the home in the future.
Cost Of A Title Search
The cost of a title search generally ranges from $75 – $200. The price can vary based on the state you’re purchasing in. At the end of the investigation, you should receive an easy-to-follow report on the documents connected to the property and highlights of any encumbrances you’ll need to resolve before moving on with the purchase.
You can dramatically slash the cost of a title search by performing it yourself. But this option can be time-consuming, and if you aren’t comfortable with “legalese,” you may miss a debt or lien, and you won’t realize your title isn’t free and clear. It may be a good idea to leave this step to the professionals and budget for the cost of title fees, knowing that a title search will give you peace of mind and confidence as you move forward with your home purchase.
The Bottom Line
A title search is a key part of the home buying process. To feel comfortable about your home purchase, you should understand the ins and outs of the title search process.
With this newfound knowledge in the home, you can confidently decide whether heading to the closing table to move forward with the purchase is still in your best interest. Start the home buying process with Rocket Mortgage®. We’ll help you navigate every step of the process – including the title search.
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