All properties have titles, which list the rightful owner of the property. Title searches are conducted when a property is changing hands to ensure the person selling is indeed the rightful owner and that there are no issues associated with a property, such as unpaid taxes or other money owed.
How are title searches conducted?
The person performing the title search will pore through many documents to gain a full understanding of a property. This includes federal and state tax liens, financial judgments, records regarding bankruptcy, deeds, county land records, among many others. When the search is complete, a Preliminary Title Examination report is issued, which lists all possible problems associated with a title. If there are no claims found, the real estate transaction can proceed as expected.
When do they occur?
During a real estate transaction, certain funds are kept secure in a trust account, which is overseen by the settlement agent until the closing occurs. Title examinations are often requested by the lender during escrow, but they can also occur when a person is refinancing their own home or buying a home with their own funds. Title issues must be rectified before the sale takes place, or the new owner assumes any outstanding problems associated with a property.
Who needs a title search?
While it is obvious why buyers would want a title search to be conducted, title searches are also useful to sellers. When a seller has what is known as a “marketable title”, they will have a better chance of selling a property in an expedient manner. Buyers want to rest assured that there are no defects associated with a title before they close on real estate.