It makes good sense to have a real estate title search done on any property that you are planning to purchase. But what exactly is searched and what can you expect to find in the final report?
Why Title Searches Are Performed
The primary reason for conducting a real estate title search is to ensure that the property is legally available for sale by the current owner. A title search will also uncover any restrictions on use of the property and if there are any liens against it.
Almost all mortgage lenders will require a real estate title search before they grant the loan. This is done to safeguard their investment in the property. Property owners have the additional benefit of finding out if there is a use restriction on the property.
If the title search turns up an issue, then the transaction could be jeopardized. In some states it is required that the title be free and clear before the sale can proceed.
The Role Of The Real Estate Title Company
A real estate title company often performs the title search. These companies are familiar with the processes and different ways a property may be categorized, allowing them to perform a search much more quickly and efficiently than an individual can. A title search is much more complicated and detailed than it appears. Whoever is conducting the search will be looking for outstanding mortgages, liens and judgements, past due taxes or bills for municipal services, deeds, special assessments and homeowners association restrictions, just to name a few.
To further complicate matters, the property may be listed in numerous different ways. It may be filed under the current owners name or under the property address or under the property tax ID number. Knowing the ins and outs of these filing differences is one of the primary benefits of having a local real estate title company perform the title search.
What Will The Report Disclose?
Generally, you can expect to find a listing of past mortgages or liens on the property. Liens could be in the form of property, tax, or contractor liens. There may even be child support or spousal liens against the property. You will also be able to see if there are any use restrictions on the property or special assessments. A survey or plat of the property will be included in the search. This will indicate the current zoning of the property as well as the legal description of the property, flood zone status and easements or right of ways.
The report will likely group the findings into the following categories: Deed Information, Tax Information, Liens or Judgements and Mortgage or Deed of Trust.
The most common things to see when you receive the title report is the assessed value and property taxes for the property and whether or not they have been paid for the year. If they haven’t been paid yet they are probably in escrow and will be available for paying the taxes when due. You’re also likely to see a listing of the current owner’s mortgage(s) on the property. If the property has not yet been paid for in full, the current mortgages will appear in the report. Once the property has been closed on, those mortgages will be paid off and your own mortgage would then appear in a title search, if conducted.
Although a real estate title search is an involved research project, interpreting the title report is fairly straightforward. The information gleaned from the report will help ensure you are fully aware of anything that might restrict your enjoyment of your property purchase.