The purpose of a title search is to determine who owns a property and has other rights to it, including any sort of lien on the property. It's usually important to do a title search before buying a property to ensure that the entity selling it actually has the right to do so.
You may conduct a title search in other circumstances as well where you need to understand who owns a property, such as if it's somehow creating a nuisance in the neighborhood. Some title searches can be done yourself, using online public records, but you may wish to hire a specialized firm or attorney for important purposes.
Title searches reveal several things, including the identity of the property owner, anyone who may have rights to the property and whether there are any liens on the property.
Understanding Real Estate Title
In the United States, who owns what property is generally a matter of public record. Deeds specifying who owns a property and any encumbrances on it, like mineral rights transfers, mortgages or liens, are recorded at public records offices in the city, town or county where the property is located.
Title records effectively form a chain of documentation of how the property has changed hands over time, going back to its first recorded owner. It's generally important to make sure that the current owners do have the rights to the property that they claim to, and that there are no other people or organizations who also have some claim to the property, which can cause issues when buying and selling the land, taking out a mortgage and other transactions.
Title Search – Online Vs. Professional
You can usually access title records yourself either online if they're available digitally in your jurisdiction or by physically visiting the government building where they're stored. If you're not an expert, it's often best to hire a real estate attorney or a title search company to conduct this search for you. Some also have their own databases of public records that they can access more readily than the original files at your local city hall or courthouse.
The lawyer or company will then prepare a report for you spelling out what the title situation is with the property in question. If there is an unexpected part owner, lien, back taxes or another issue, you may need to work to resolve it before doing a transaction involving that parcel of real estate.
The title search may also provide information about the jurisdictions in which the property is located, such as fire, police and school districts, as well as any special taxes or levies that may apply to the property. This can be helpful when you are considering buying property so you don't get a surprise tax bill or find yourself living in a different jurisdiction than you had planned on.
Understanding Title Insurance
When you purchase property, it's common to purchase title insurance, which, as the name suggests, covers you against any problem that may be discovered later on with the title to the land. For example, if it's later discovered that one of the prior transactions involving the property was fraudulent or that there is a previously unknown prior owner, this would be covered by title insurance.
Mortgage lenders will sometimes insist that you acquire title insurance, since their ability to use the property for collateral on the loan will be limited if someone else already has an undisclosed ownership interest in it. Even if you're not required to take out title insurance or are paying for the property with cash, it can still be a good idea.
Note that title insurance and homeowners insurance are two different types of insurance. Ordinary homeowners policies don't cover title defects, just as title insurance doesn't cover loss to fires, burglaries and the like. Make sure you understand the terms of any insurance policy you're buying or considering.
Common Land Title Problems
The purpose of a title search is to uncover potential problems with the property's chain of ownership. This can be simple clerical errors that can be corrected administratively or more serious issues. If you discover title issues through the title search process, you can begin working with experts to resolve the issue. In some cases, you may determine that a property you wanted to buy isn't available on the terms you want and may need to look elsewhere.
For example, a property might have additional owners you are unaware of because a previous owner divided it among his heirs, who you may not be aware of, or may have even left a will that wasn't immediately discovered. This can be found through a thorough title search.
Other Deed Problems
There can also be problems with previous deeds themselves, such as if someone transferred ownership in the land while underage or legally deemed incompetent. Occasionally, deeds can even be forged or otherwise invalid, such as if someone indicated that they were single rather than married when transferring the rights to land.
There can also be restrictions on the property that could interfere with your right to use it as you wish, such as if a government agency or some other organization, like a railroad, has easement rights letting people enter the land to do work. There may also be covenants, or legal restrictions, in the deed limiting what can be built on the land or mandating membership in a regulatory organization like a homeowner association. While such terms may not always impact your decision to buy certain land, they're still generally worth knowing about when evaluating a price and making your decision.
Transferring Title to Land
There are a few different types of deeds that you can use to buy and sell real estate. One type of deed is known as a general warranty deed, and it includes a promise that the full title to the land is being transferred without someone still holding the right to it. A special warranty deed can make limited promises about the ownership status of the land. Note that warranty deeds are a separate concept from home warranties and other types of warranties that may cover land, buildings and the goods inside them.
Another type of deed called a quitclaim deed transfers one person's interest in real estate to another, but it doesn't make any guarantees about whom else may have rights to the real estate. It's often used in more informal situations such as transferring land between relatives or spouses. Another similar type of deed called a bargain and sale deed also makes no guarantees and is often used after tax and foreclosure sales, where the selling entity doesn't make any claims about who else may have rights to the land. Other, more exotic deeds may also exist in various jurisdictions for specialized purposes.
Filing a Deed
Deeds need to be filed at the appropriate government office, and often you must pay a tax at the time you record the deed. Check with your local government to see how and where to file a deed, and how much you must pay to do so. Deeds are standardized legal documents, and different jurisdictions require them to have particular language and formats to be valid. Make sure you understand what's required to transfer land in your jurisdiction and consider working with a lawyer if you need help drafting or filing a deed.
- First American: The Title Search Process
- Title search - Wikipedia
- What is Title Insurance? | First American
- Courthouse Direct: How to Transfer a Land Title Deed
- First American: 10 Common Title Issues
- US Legal: Bargain and Sale Deed Law and Legal Definition
- Consumer Financial Protection Bureau. "What is owner's title insurance?" Accessed August 1, 2020.
- Old Republic Title. “What Is Title Insurance and How Does It Work?” Accessed May 22, 2020.
- Zillow. "What Is Title Insurance and Do I Need It?" Accessed August 1, 2020.
- GovInfo. "Public Law 93-533-Dec. 22, 1974," Page 1728. Accessed August 1, 2020.
Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.