What Is A Title Search

Share

Download the PDF 

Before the transaction can close, a title search must be conducted producing a title commitment.

The most accurate description of title is a bundle of rights in real property. A title search is the process of determining from the public record just what these rights are and who owns them.

A title search is “a review of all recorded documents affecting a specific piece of property to determine the present condition of title.”(Financial Real Estate Handbook, 2001)

A title search is a means of determining that the person who is selling the property really has the right to sell it, and that the buyer is getting all the rights to the property (title) that he or she is paying for and entitled to receive. In most real estate transactions today a title insurance policy is purchased to assure the buyer that he or she has purchased a valid title.

The title company must determine insurability of the title as part of the search process. This leads to the issuance of a title policy, which insures the existence or non-existence of rights to the property.

The title insurance company will, at its own expense, defend the title and will pay losses within the coverage of the policy if they occur.

Chain of Title

This is simply a history of the ownership of a particular piece of property, telling who bought it and sold it, and when. The information may be derived from public records, usually an Auditor’s, Recorder’s, or Real Estate office at the County Courthouse, or obtained from title plants privately owned and maintained by title companies. The deeds or title to the property must be thoroughly reviewed for accuracy and proper legal transfer of ownership as well as indication of special interest in the property or special conditions to sell property.

Tax Search

This is a search to determine the present status of general real estate taxes against the property. The tax search will reveal if taxes are current or whether any taxes are past due and unpaid from previous years. In addition, the tax search will indicate the assessed valuation of the property and the existence of any special assessment against the land and, if so, whether or not these assessments are current or past due.

A due and unpaid tax or special assessment is a prior lien or claim on the property above all others, even mortgages recorded prior to the past due assessment. If a buyer purchases property with unpaid and past due taxes or assessments against it, he or she is likely to find a government body, the village, county or state placing the property up for sale to pay those taxes or assessments. A tax search reveals the status of the taxes and the title insurance protects the buyer against loss from unpaid and past due taxes and assessments.

Judgment and Name Search

One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners which were in existence while they owned the title. A judgment is a general lien against the debtor’s real estate and constitutes security for any money owed under the judgment. The real estate can be sold to satisfy the judgment.

It is extremely important to be sure that a title is not subject to judgments against the seller or previous owners. Title insurance provides this protection. A judgment against a person named Smith may affect the title of a seller named Smith, depending on whether or not they are the same person. So all possible variations of the name must be examined.

For example, the name Smith might be spelled Schmidt, Schmid, Schmidtt, Schmidz, Schmied, Schmiedt, Smid, Smythe, and so on. The name Nichols can be spelled 73 different ways, from Nachols to Nychals. The task is to determine which of these applies to the owner in question. First names have to be checked, too. There are 25 foreign forms of John, including Johann, Jehan, Hans, Shaun, Gudi, and Efom.

Rights established by judgment decrees, unpaid federal income taxes, and mechanic’s liens all may be prior claims on the property, ahead of the buyer’s or lender’s rights. If a judgment is discovered that constitutes a defect in the title, it is pointed out, and the seller must then eliminate it before the title of the new buyer can be insured free and clear of that judgment.

Many times a title company representative will ask the real estate agents or lenders for additional information to clarify information or eliminate lines or encumberances. Common questions to be asked will be the seller’s or buyer’s Social Security number, place of residence for past 10 years, other names held, current and former spouse names.

Lien Search

In addition to the judgment search the title company searches the Recorder’s office for other liens such as mortgages (1st, 2nd), land contract rights, mechanics liens, to name the most common. These liens must usually be paid, released, subordinated or assumed prior to the transaction closing.

Lastly, the title company must check the courts for Estate information, Divorce information, bankruptcies, etc., which could all affect the status of the property and, in turn, determine what requirements the title commitment will show.

Commitment

When these searches have been completed, the title company issues a commitment to insure, stating the conditions under which it will insure the title. The buyer and seller and the mortgage lender can proceed with the closing of the transaction after clearing up any defects in the title which may have been uncovered by the search and examination.

The mortgage lender is as concerned as the buyer about the quality of the title because the property is to be security for the new mortgage loan. The mortgage lender requires assurance that it has a valid first (or another acceptable priority) mortgage lien on the property. This is not only common sense, but generally is a legal requirement of regulated mortgage lenders.

The lender’s title insurance, however, doesn’t protect the new buyer of the property. Although the land is the same, the interest of the buyer and the interest of the lender are very different. The provisions of a lender’s title insurance policy are very different from those of a buyer’s policy, so the buyer should obtain his own policy, often issued simultaneously with the lender’s policy.

800.777.1574 • meridiantitle.com

Have a Question, Concern, Comment

Have a Question, Concern, Comment

We look forward to hearing from you!

Contact Us

Learn More About Title Insurance

Learn More About Title Insurance

What is Title Insurance?
Why Do I Need it?

View Our FAQ Page

Want to learn more about the home closing process?

Want to learn more about the home closing process?


                 
The American Land Title Association has made available a web portal that will answer many questions related to the home sale and purchase process.  Take and look, let us know if you need additional information.

Take A Look