When buying a new house or property, there are many factors to consider. Home insurance, mortgage, interest rates, property tax…the list goes on. A title search is another important task to consider when buying a house. For any real estate transaction to succeed, a title search is necessary for both the buyer and seller.
What Is a Title Search?
A title search is a search through public records, including deeds, county land records, tax liens, divorce cases, and various court records, to discover a property’s legal ownership. A title search can tell you if there are any claims or liens on the property you’ve just bought, and confirm that you are the rightful owner of the property after your real estate transaction.
How Does a Title Search Work?
Usually performed by a title company or a lawyer, a title search is done on the behalf of a buyer interested in a property, or who has already purchased a property. Mortgage lenders have also been known to conduct title searches in the past to verify ownership of a property
Cost of a Title Search
The cost of a title search can differ on a case-by-case basis, depending on a variety of factors. Generally, the cost of a title search begins at $350 for a $500,000 home, and it increases if the cost of the property is higher. The cost can also depend on the amount of the loan or mortgage on the property.
When closing a deal on a house, you will usually pay a one-time fee for title insurance, which often covers the cost of a title search.
Why Does a Title Search Need to be Performed?
Title searches are performed for the best interest of both the buyer and the seller of a property. For the buyer, the title search will ensure the following are disclosed:
- Liens
- Child support
- Judgements
If any of the above are not discovered before the closing of a property sale, the buyer can face expensive consequences. The title search will also determine if a title can be insured. Title insurance will protect the buyer if any of the above issues are discovered after the close of the sale.
For the seller, title searches can ensure there are no defects that could result in someone challenging your right to the property. A defect can look like someone claiming the property is their own or claiming that the seller never owned the property. If you have a “marketable title,” it means that there are no defects.
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Benefits of Buying Title Insurance
Title insurance ensures that both buyers and sellers are protected against financial loss or damage resulting from any issues in a property’s title. While most insurance policies cover loss associated with future events, it is interesting to note that title insurance protects against claims from the past. A basic title insurance policy usually protects property owners against the following hazards arising from a title search:
- Terms that minimize property value or enjoyment, such as unrecorded easements
- Incorrect or forged signatures and fraudulent information on title documents
- Flawed or incorrect recordkeeping
- Ownership by another party
- Outstanding lawsuits or liens
Can I Do a Title Search on my Own?
You can do a title search on your own, but it is a lengthy process that requires a lot of documentation. Most people will have an attorney carry out the process. However, if you want to conduct the search on your own, here’s what you need to do:
- Obtain the property’s legal description (found on property tax statements)
- Go to the Recorder’s Office or Office of the Examiner of Titles with the legal description
- Request public access to records and look up the legal description
- Interpret the records yourself, or with a lawyer, to determine the property’s status
Despite the fact that it is indeed possible to conduct a title search on your own, most experts recommend against it. A lawyer is usually more prepared to handle all of the legal jargon and details within the records.
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Final Thoughts
Title searches are vital in protecting both sellers and buyers of financial loss and issues resulting from a property sale. Although not all titles have issues, the cost of not addressing title issues before a sale can be financially disastrous for a buyer or seller. When making as big a purchase as a house or property, it’s better to play it safe and be prepared.
