When you move through the home buying or selling process, there are endless things to keep track of. You may be so focused on financing the home, you overlook some other key details. In the flurry of paperwork and home inspections, you may forget about one small but important element—a property title search.
“Title issues can be complex, and you should examine them closely before buying property,” said Maikel N. Eskander, a Florida-based attorney who practices real estate and business law with Eskander Loshak LLP.
A property title issue could sink an otherwise smooth transaction—and it happens more often than you may expect. Title or deed issues account for 11% of property-settlement delays, according to a recent survey. To cut back on potential headaches, you may consider a property title search early in the process. Whether you are buying or selling a home, here’s what you need to know.
What is a property title search?
As you get closer to the closing date, your lender may talk about your home’s deed and title. To avoid trouble, you should know the differences—and how they each may impact your home.
The deed is a physical legal document. Your written deed is evidence that you own the property. But the title is a collective concept. It shows who is legally and financially responsible for your property. For example, when you have a mortgage, it’s part of the public record as a lien on the home’s title. “This shows the property has a mortgage and it shouldn’t be sold until the loan is paid off,” said Eskander.
Before you can buy or sell a home, you will need a property title search. This involves checking all the public records associated with the ownership of the property. You can examine the documents to look for any defects or claims against the title. Some of these documents may include bankruptcies, county land records, deeds, divorce records, federal or state tax liens, and foreclosures. A title company can determine if you need to take any actions—like paying off an old mortgage or lien—before the property changes hands.
Why run a property title search?
You can’t buy or sell a home without a clear property title. A property title search will re-confirm the rightful owner of the home. It will also make sure there are no outstanding debts that may prevent the sale.
Property title issues may cause more than a few headaches. Some folks have experienced major problems after buying homes without a clear title. They have dealt with foreclosure, lawsuits, fraudulent sales and more.
To try and protect your property, the American Land Title Association suggests working with a title insurance company. Lenders require this protection. It may offer your family peace of mind to know old issues won’t resurface—and you won’t need to defend your rights to the property. There is one caveat, though. “It does not cover things in the future, unlike most other types of insurance,” Eskander warned.
How to run a property title search
If you’re ready to run a property title search, you have a few options—do it yourself, try an online property search or hire a professional.
Do it yourself
The cheapest way to run a property title search is to try and do it yourself. The biggest expense is the time it takes to collect and review the information. Once you know the property details, you can follow these steps:
1. Gather the property deeds. To start the process, you will need access to the home’s past and current property deeds. Your city or county may have an online portal to sift through public records. If you can’t search online, you can visit the tax assessor’s office in person. The process may be free or you can do it for a small fee.
2. Create a chain of title. Once you have access to several decades' worth of deeds, compare the names of the buyers and sellers. You should look for any gaps in ownership or years where the buyers and sellers don’t line up.
3. Check for liens. As you are looking through the property deeds, make a copy of the tax history and take note of unpaid tax bills. You should also look for two types of property liens: mechanical/contractor and judgments. To find these, you can look online or visit the county recorder, clerk or assessor’s office in person.
Use an online property search service
You can also use an online property search service, which may give you access to details like:
- Deed information
- Owner history
- Home sales history
- Other property details
One of the perks is quick access to the information, though these services may cost more than a DIY search.
Hire a professional
When in doubt, you should opt to hire a professional title company or a real estate attorney. For title insurance, you can expect to spend somewhere between 0.5% to 1% of the home’s purchase price. This will be part of your closing costs and it may be possible to negotiate who foots the bill. “It’s best to contact a real estate attorney in your state with any specific questions or concerns,” Eskander said.
Better safe than sorry
There’s no doubt about it—buying or selling a property is a major decision. Before getting too far along in the process, you will want to make sure your property title is clear. Whether you do it yourself, look online or work with a professional, it’s critical to run a property title search. But if you get overwhelmed, don’t be afraid to ask for help. “Real estate and title issues vary by state. It’s important to check your local laws and speak with a licensed attorney before making any legal decisions,” Eskander adds.