Content of the material
- What Is A Title Report?
- What happens if issues surface during the title search?
- Possible Problems Found by a Title Report
- Title Search and Examination
- Why are preliminary reports important?
- How To Get A Title Report For A Property
- How Do Title Searches Identify Who Owns A Property?
- The Process
- The Findings
- Get the free Opendoor app
What Is A Title Report?
A title report is a document that outlines the legal status of a property and related information on its ownership. Several key components must be included in a title report. This includes information on the county, zoning laws, property value, and current tax information. Title reports will also feature a full, legal description of the property. In many cases, a sample title report will include paperwork on the chain of ownership, unreleased or open mortgages, judgment dockets against prior or current owners, and supplemental information within the scope of the search. For a full title report sample, be sure to read this example provided by Free and Clear.
What happens if issues surface during the title search?
A title search may uncover one or more problems with the title. Here are some common title issues, along with corresponding strategies to resolve them:
- Break in the chain of title – This issue can appear when there is a missing deed in the chain. “If party A conveys property to party B, and then party C conveys the same property to party D, we are missing the link between parties B to C,” says Stitgen. “This can be resolved by obtaining a deed from party B to party C, or a deed from party B to party D.”
- Improper or missing legal description on the deed – These errors are common, and depending on the nature of the incorrect information, this typically requires getting a corrected deed from the same parties to fix the error. “In some cases, an affidavit from a scrivener, preferably the party who drafted the document or recorded the document, someone with knowledge of the transaction, may suffice to solve the problem, but only if the mistake is non-material and doesn’t change the nature of the legal description,” Stitgen says.
- Potential missing interests – When the title chain includes a transfer via an estate, it’s essential to make sure any heirs have properly relinquished their interests in the property. “If this has not been done, it will be necessary to obtain [quitclaim] deeds from these parties releasing their interests,” says Stitgen.
- Open security deeds – The title search may uncover an open security deed from the current or prior owner that was never released. “If so, some research needs to be conducted to determine if this is left open in error. If it was, you’ll need to obtain a release from the holder of the security deed,” advises Stitgen.
- Liens – A lien is a legal right or claim on a property that is commonly used as collateral to fulfill a debt. A title search will often identify potential liens on a property, such as mechanic’s liens for unpaid home improvements. These will require extra research to learn if the lien has expired, if it is possibly not actually for a party in the chain of title or if it is a valid lien that needs to be paid.
- Unpaid property taxes – Another type of lien, any outstanding property or “ad valorem” taxes, which are based on the assessed value of the home, will need to be paid before transferring the title to the new owner. If the tax lien certificate has been sold, this will need to be bought back from the holder.
If one of these issues or another is found, homebuyers generally have three options, depending on what’s allowed in their purchase contract, according to Hollander:
- Ask the seller to resolve the issue before closing.
- Ask the seller to compensate the buyer for the cost to fix the issue.
- Walk away from the deal and receive a refund of their deposit.
Possible Problems Found by a Title Report
The title report should uncover any defects in title that could interfere in the transfer of ownership. Common title problems include:
- Errors in public records: Mistakes made in official documents, such as clerical or filing errors, could affect the validity of the deed.
- Property liens: Banks or other financing companies could place a lien on the property for unpaid past debts of prior owners.
- Illegal deed: If a prior deed was made by someone not legally entitled to enter into a legal document, the enforceability of that deed could be affected. A deed could be illegal if made by a minor, someone not of sound mind, an undocumented immigrant, or someone reported as single who actually is married.
- Heirs: Sometimes heirs are unknown or missing at the time of a property owner’s death. Family members could contest the will to establish property rights.
- Forged documents: Forged documents affecting property ownership could be filed within public records that obscure the property’s rightful ownership.
- Encumbrances: A third party might hold a claim to all or part of the property, limiting the use of the property.
- Boundary disputes: Surveys might exist that show different boundaries of the property.
- Undiscovered will: The state sometimes sells a deceased property owner’s assets if that owner dies with no apparent will. However, if a will is discovered in the future, property rights can be jeopardized.
- Impersonation: If you buy a home once sold by someone falsely impersonating the property owner, then your legal claim to the property is at risk.
- Building code violations: Discovery of unresolved violations could affect a title.
Title Search and Examination
When they receive an order, title insurance professionals conduct a thorough search and examination of the title. Title professionals scour public records to determine the rightful owners to a property and determine any defects or “clouds” on the title, such as liens, levies and encumbrances. Because property data is filed in public records, this information usually is readily available; however, errors, forgeries, and other matters could affect the state of these records. That’s why title insurance can protect you in the future.
Why are preliminary reports important?
These reports are important for a few reasons. For starters, some homeowner associations may have restrictions that regulate anything from additions (like pools and accessory dwelling units) to exterior paint colors to a maximum height of hedges. These restrictions are sometimes outlined in the preliminary report. As such it’s important to review the report so that you’re aware of any limitations on the property before you commit to buying. If you are financing the sale, title insurance will most likely be required by your lender.
Before the title company issues a policy, they will investigate county records to verify that the title is clear (free of any defects or judgments) and the seller has the right to sell the property. If any issues are uncovered during the discovery period, your title company will assist with resolving those before you close.
In the case of unpaid taxes, for example, you can typically resolve the issue with the seller by requesting they pay the judgment or having the amount deducted from the sales price and settling it yourself.
How To Get A Title Report For A Property
Gather information about the property with the records you do have
Go to the local courthouse and search through property deeds
Try to establish a chain of ownership for the property
Visit the County Assessor for more help on locating the actual title
If you still do not have the records, ask your network for a reliable title officer
Work with the title officer until you have the documents you need
It is entirely possible to get a title report for the property you intend to buy on your own. However, title reports are complicated, and those that aren’t well-versed in the language offered in each report may as well be reading another language. Suppose you are confident in your ability to read a title report. In that case, there are two things you can do to glean more information on the property in question: visit the property’s local courthouse or County Assessor.
Courthouses contain a wealth of information on local properties, not the least of which includes chains of title and deed information. That means there’s a good chance your property’s information can be found a few blocks away if you know what to look for. Better yet, this type of title search is free.
In addition to the courthouse, the County Assessor could have what you are looking for — for free, nonetheless. Most states now have additional tools available for free property title searches, and there’s a good chance it is stored at the County Assessor’s office. Just know this: the information isn’t always complete, so take what you glean with a grain of salt.
While it’s easy to take the free route, I don’t recommend doing so unless you are completely confident in your ability to decipher records without error. While visiting your courthouse and Assessor can net you some great information, these methods are only reserved for professionals. I recommend working with a professional for those of you who are less well-versed in conducting title searches.
If you don’t know how to get a title report for a property you are interested in buying, I highly recommend hiring a title officer. As the name would lead you to believe, a title officer is someone that has been professionally trained to identify the defects of a home — again. Defects are those discrepancies that could call a home’s true owner into question. Otherwise known as a title agent, title officers are responsible for confirming whether or not a piece of real estate is, in fact, legitimate and that there are no issues with its title. In doing so, title agents will investigate the status of a property over the course of an impending real estate transaction, ensuring the buyer of exactly what they are dealing with. That way, buyers can commit without the threat of ownership issues appearing in the future.
How Do Title Searches Identify Who Owns A Property?
A title search digs into the public records available for the property in question. Typically, an attorney or title company will use a variety of legal documents to confirm that the seller is truly the rightful owner. Beyond that, the title search will root out any other financial and/or legal claims on the property.
The person conducting the title search can be called an abstractor. The abstractor works to pull together all the relevant information and legal documents that they can find about the property to create an abstract of the title. The abstract of title will include a recorded chronology of all available documents and transactions related to the parcel of real estate in question.
The abstract could include the current owner and previous owners. It could also include past surveys of the property, any easements that cross the property and any relevant wills and lawsuits that involve the property.
A title search can uncover any financial rulings against the owner of that property title which could affect you financially in the future. A few examples include any outstanding property taxes, any liens against the house or easements of any kind. If there are any outstanding claims on your property, that could bode badly for your happily-ever-after in this new home.
It’s critical that your house title search shows clear and free ownership of the property. Otherwise, you could be in for an unpleasant surprise down the road. Luckily, there are ways to mitigate the potential risk of a claim on your new property’s title.
You can purchase title insurance or secure a warranty of title. The one-time purchase of a title insurance policy can protect your ownership claim of the property, so it’s worth considering the expense.
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