Although the importance of a title search when looking to purchase property is well known, not everyone knows much about the process. The following will answer three common questions that often come up regarding title searches.
#1: What exactly is a title search?
A title search is a review of various documents that are connected to a specific property. This can include deeds, tax liens, bankruptcy records, county land records and any other financial judgement that could be present against the property.
Once a professional reviews these documents, the reviewer will generally put together an Ownership and Encumbrance report. This report provides information on any pending lawsuits or judgements against the property. Common concerns that can arise may include a contractor that completed work on the property but did not receive full payment and has put out a lien on the property or a bank that claims interest in the property due to an unpaid mortgage.
#2: Who conducts a title search?
Due to the highly technical nature of a title search, it is wise to hire a professional. A proper tile search requires the reviewer to gather the property’s legal description, generally available on the property’s tax statement. The reviewer must then have that information entered into the country Recorder’s Office or Office of the Examiner of Titles’ records to gather any paperwork connected to the property. The reviewer must then carefully look over these documents to determine if there any encumbrances on the property. Depending on the details of the proposed transaction, the parties involved may need to take additional steps before moving forward with the deal.
#3: What could go wrong if I skip the title search?
It may be tempting to save some money and skip the title search. Although this may translate to some initial savings, it could lead to serious expenses in the future. A failure to find and address any encumbrances on the property prior to finalizing the transaction can leave you to deal with any issues that arise.