What is ‘Title Search’ and what is the process:
A title search involves a thorough research and examination of recorded transfers and conveyances on a property, real estate or land. This process will identify and confirm the property’s current legal ownership as well as surface any liens, encumbrances or claims that could potentially impede proper transfer and potentially cloud title if not cured. This includes judgments and delinquent taxes owed on the property.
Who performs a title search and why:
A title search is typically performed by a title company or a real estate attorney usually on behalf of a potential buyer interested in a purchase or acquisition of land or property. In many cases a mortgage lender will initiate the title search to verify legal ownership of the property and expose any outstanding claims or judgments against the individual as well as the property before underwriting and approving a loan or using the property as collateral for other credit purposes. The benefit of using a third party such as a title company or attorney is indemnification of the search AKA a “Title Opinion” or “Title Guarantee” in the form of a title policy.
Potential Issues exposed in a properly conducted Title Search:
Prior to the opening of escrow and purchase of a property, the title company or real estate attorney will perform due diligence with a search of all available public records on the property’s past and current ownership. Once the search has been completed, a preliminary title report will be prepared. If there are any problems or issues that arise with the current title, the buyer can notify the seller and review the issues with the seller. Depending on the type of issues found, a buyer can then determine whether or not they wish to move forward on the purchase of the property or what action would be required to cure the defects on title. Some issues can be difficult and costly to resolve while other issues can be cleared up rather easily with minimal effort and cost involved.
What a buyer should expect out of a properly conducted title search:
The bottom line is that even a reputable title company or attorney experienced in conducting these title searches can, and on occasion does, inadvertently omit or miss an issue that can arise later during the transaction. This includes errors made by the recorder’s office in the indexing of a recorded document or paperwork error that can lead to a document being overlooked. These types of mistakes and human errors can ultimately lead to a costly and sometimes drawn-out purchase agreement process. This is why we always recommend to our clients to always purchase title insurance which will protect the buyer as well as the mortgage lender from any potential financial losses if an issue should arise during the escrow and closing of a sale.