- A title search is the process of looking at historical records of a property to see who has a claim to it.
- A title search reveals whether the seller has the legal right to transfer the home to you.
- This process takes place after you're under contract on a home.
When you buy a home, your mortgage lender will require a title search — a comprehensive look at legal records for the property you're purchasing.
The title search process protects both the buyer and the lender — if you don't ensure that the title is clear, you risk financial troubles or even losing your home if issues crop up down the road.
What is the purpose of the title search when buying a home?
The goal of a title search is to make sure that the seller is the legal owner of the home and that there are no outstanding issues or liens on the property that would prevent the seller from legally transferring the home to you.
How do you do a title search?
There are two steps when conducting a title search for home purchases: examining public records and identifying any legal or financial claims against the property. Here's how those steps work.
Examining public records
The first step is to pull any public records for the property. These include deeds, leases, contracts, legal notices, zoning violations, maps, land surveys, easements, and more. This helps establish who the rightful owner of the property is, as well as its legal boundaries and limitations.
Identifying legal and financial claims
A title search will also look for legal judgments against the property (or the property's owner) and potential liens. Liens are claims that are placed on a property because of an unpaid debt. They can stem from unpaid contractor bills, property taxes, HOA dues, and more.
The importance of a title search
The importance of title search in real estate cannot be stressed enough. These are vital steps in the homebuying process. Not only do they ensure a property can transfer seamlessly to a new owner, but mortgage lenders also require them.
Ensuring clear property ownership
In order for someone to sell a property, they have to be the legal owner of it. That's where a title search comes in, establishing a chain of ownership and ensuring the person selling the home is the current rightful owner in the eyes of the law.
Uncovering any liens, easements, or encumbrances
Liens and encumbrances are important to uncover, as they could put the home at risk of foreclosure if the creditor comes calling. You'll want to resolve these before moving forward with your purchase.
Identifying easements is critical, too. These can limit how you can use your property, as well as how it can be used and accessed by third parties. They may impact how you can renovate your house later on, too.
Who does the title search?
Your lender will order a title search on any property you intend to buy. Depending on where you're purchasing, this may be done by one of two parties: a title company or a real estate attorney.
The title search takes place after you have had your offer accepted on the home, but before closing.
Title companies and attorneys
Title companies specialize in the title search process. They do title searches and often provide title insurance, which protects you and your lender if someone else tries to claim the property. Sometimes, they also handle the closing process, so you may visit your title company to sign your papers and pay your closing costs.
In some states, attorneys handle the title search process. They may also be present at closing as you sign your final documents.
The role of professionals in the process
While you may be able to access public records on your own, it's best to leave title searches to professionals. They're trained not only to identify the proper documents to evaluate in a title search, but also to spot potential issues that could pose a legal or financial problem once you own the home.
Potential issues uncovered by a title search
Title searches can uncover any number of issues, particularly if a home is older and has a long line of past owners. Here's what you should watch out for:
Outstanding mortgages or liens
A title search might find that there are unpaid mortgage loans on the property or liens against the house. These liens can stem from any number of unpaid debts, including property taxes or even bills from contractors who repaired the house at some point. (Essentially, the unpaid party has a right to sell the house and use the proceeds to collect on the debt.)
Disputes over property boundaries
Sometimes, current and past land surveys can contradict each other, showing different boundaries for the property. This may mean a neighbor or other party could lay claim to part of the land.
Easements affecting property use
Title searches may also reveal easements, which give other parties certain rights to your property. It could give a utility company the right to access your yard for repairs or equipment maintenance, or it might grant your neighbor the ability to pass through your property to access a public road. There are also easements that can limit what you do with your property. (For example, you may not be able to add that additional story if it would block your neighbor's views.)
What happens after a title search
What happens next depends on the outcome of the title search. If the search revealed any claims against the property or easements, you'll need to address those before you can move forward and get fully approved for your mortgage. If the title search was clean, you can proceed with your purchase.
Resolving any issues found
The first step is resolving issues found in the title search. If there were any liens, boundary disputes, or legal encumbrances identified by the title search, you'll need to decide who is financially responsible for taking care of those. The seller can take care of them or compensate you for dealing with them yourself. You can also split the costs, or you may be willing to take on costs such as unpaid property taxes. If you can't reach an agreement with the seller, you'll probably want to back out of buying the house.
Proceeding with a property purchase
If your title search was clean, you can move forward with your home purchase. Your lender will begin underwriting and processing your loan, and you'll be given a scheduled closing date. This is when you will finalize the transaction, sign all the legal documents, and pay your closing costs.
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Title search FAQs
What is a title search in real estate?
A title search is a detailed examination of public records to verify the legal ownership of a property and identify any claims, liens, easements, or other encumbrances on the property.
Who orders the title search?
Your lender will order the title search after you've had an offer accepted on a home and are going through the mortgage underwriting process.
Can you do a title search yourself for free?
You may be able to do a title search yourself for free by checking local property records. However, if you're buying a home, it's best to leave the title search to the professionals, since you're making a big investment.
How long does a title search take?
Your title search may take up to a couple of weeks to complete.
What are the most common problems found in a title search?
Liens, which may come in the form of unpaid debts or property taxes, are a common issue found during title searches.
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