Waiting on your home to close can feel like it takes forever. Then, just when you think you are ahead of the game, there’s another setback. One of those sneaky setbacks can be a property title search. A property title is a fancy way of saying who has the right to own the property—and in turn, can sell it.
While it may seem like a no-brainer that a home seller owns his house, there could be hidden claims or liens on the property the homeowners themselves may be unaware of, making a title search crucial for both buyers and sellers.
What is a property title search? When is it done? Who does the searching? What does it cost? As we mentioned above, a property title determines who has the right to sell the home. The property title search is a search for documents on a specific property.
The resulting report is composed of documents that determine whether or not the property is free of liens and pending lawsuits, and if title ownership is accurately represented by the seller.
A clean property title search means the buyer and lender agree there are no claims on the property that could become an issue after ownership is transferred. The property title search is generally done after an offer to purchase real estate has been accepted. It is most commonly performed during the closing process before ownership has formally transferred from seller to buyer.
Multiple sources are searched, including deeds, county land records, state and federal tax liens, divorce cases, bankruptcy records, and other potential financial judgments against an owner that could be attached to a property. Generally, a title company or an attorney performs a property title search during the closing process. The cost of a basic report will depend on the price of the home. The property title search is usually paid as part of closing costs and included in the title insurance cost.
What outcomes are possible with a problem of a property title search? The seller can pay whatever debt they owe to clear the title. If the seller doesn’t have the money, negotiations begin. A buyer and seller can agree to split the amount needed to clear the “cloud” on the title. Or, potentially, if a buyer seriously wants the house, they may agree to inherit the debt with the home.
What if a title company misses something? Title insurance protects against problems with the title. Title insurance protects the buyer and ensures that the title company will handle any resulting problems. Title insurance is purchased with a one-time premium payment paid at closing, so there are no monthly premiums, and you are protected as a homeowner.
Mike and Brandie Brown and the Josh Vernon Group help buyers and sellers across Greater Birmingham with hundreds of home transactions each year. They know how to guide you in the right direction when potential setbacks take place. Their goal is to help protect you and your biggest investment in every way possible.