When you’re buying a new home, the buzzwords on your mind are probably things like “curb appeal” or “turnkey”. But as you narrow down your options, there’s a single term that should be on your mind: “real estate title search”.
Getting the right number of bedrooms and bathrooms in the right location is great, but even perfection can come crashing down around you if there are issues with your home’s property title.
If you’re not sure why this is important, keep reading to learn what a property title search is, how it’s used, and why you should get one before you take a leap of faith.
What Is a Real Estate Title?
Also known as the “property title” of a home, this document identifies the home’s owner. This is important because only the official owner of a home has the right to sell their property.
While this may seem like a no-brainer, knowing the legal owner of a home can be critical if you’re buying a house. Otherwise, you may be dealing with a seller who has no legal right to sell. This is sometimes the case in complicated family situations like divorce, for example, as one spouse may attempt to sell a home even though the property isn’t in their name.
What Is a Real Estate Title Search?
As the name suggests, a real estate title search will help you find the property title of a specific home. However, this type of comprehensive search will also help you find other important data.
A real estate title search digs through local records to offer a wealth of valuable information on the property. These records may include property deeds, federal and state tax liens, divorce and child support records, financial judgments, county land records, and more.
Essentially, the title search will establish a chain of ownership going back several decades, ensuring that there are no outstanding issues as ownership has transferred.
What Legal Claims Can a Real Estate Title Search Find?
There are a few important pieces of information a real estate title search can help uncover. These can include things like bankruptcies, tax information, historical oversights, and more. However, there are three major areas you’ll want to pay attention to:
A lien is the legal term for a creditor’s claim against a possession. Property liens are placed on homes so that creditors—including, banks and lenders, government agencies, and contractors—can collect on their debts.
For example, when a homeowner seeks a mortgage, the bank will take out a lien on their home. This type of lien is known as a “voluntary lien.” On the other hand, a contractor may take out an “involuntary lien” if the seller doesn’t pay for work they’ve done on the property.
Before you purchase a new home, it’s critical to know about any limitations on how you’re legally allowed to use the property.
These types of limitations are known as “deed restrictions”. Your new home may have limitations in terms of the types of construction allowed, number of vehicles you can park on the property, or structures you’re allowed to build. You may not be allowed to build new fences or run a business from the home. You may have to draw from a certain color scheme for your home’s exterior.
In certain cases, property that belongs to a specific homeowner can be used by other parties.
A common example is how utility companies have easements allowing them to use electrical poles on the properties of many American homes. Alternatively, a beach access path that technically stretches over private land might be a public easement, allowing people to walk through the property to the beach.
It isn’t necessarily bad to have an easement on a property, but it’s a good idea to know in advance.
Why Should You Do a Real Estate Title Search?
It’s a good idea to do this type of property examination before the closing process. If you’ve decided to invest in a new property, it’s important to know the full details of the property before ownership is transferred!
Doing a property title search can help you identify any issues with your potential new home before you get too deep into the buying process. Knowing about the liens, deed restrictions, easements, and even legal owner of the property can give you peace of mind before you put down tens of thousands on the purchase.
Furthermore, knowing the details of the property can put you in a better position as you negotiate the home’s price. The presence of liens on the property, for example, might be enough to adjust your offer as needed.
Note that if you are purchasing a new home and seek a mortgage, your lender will ask you to do a real estate title search anyway, so you may as well start the process in advance if you’ll be getting this type of financial support.
How Do You Get a Real Estate Title Search?
You’ll need to seek an attorney or title company in your area to perform this service for you. The amount you’ll pay for a real estate title search can vary from region to region, and it will also vary depending on the extent of your search. However, most will cost between $150-300.
The process can take days to weeks, though there are certain tools that can help speed up the real estate title search process.
Make a Choice for Peace of Mind
If you have your eye on a possible forever home, it pays to do your due diligence up front. Investing in a real estate title search can unearth the types of issues you’ll want to know before it’s too late to turn back. Before you transfer the deed, opt for this type of examination for a little more peace of mind as you move forward with the buying process.
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