Wondering how a real estate title search works? The real estate title search is a critical part of the homeownership process – and, yet, most of us (especially those who get classified as first-time home buyers) might be entirely in the dark about how exactly a real estate title search works.
LemonBrew is here to help! In this article, we’ll break down everything you need to know about how exactly a real estate title search works.
What is a Real Estate Title Search?
Before we get into the question of how a real estate title search works, let’s first answer the question of what a real estate title search is.
When you go ahead and set your sights on a piece of property you want to buy, you should know that you are merely the latest one in (what might be) a very long line of people that have actually owned that property. For many properties, that list of ownership might go back decades or even centuries. That long list of owners that have come before you is called the “chain of ownership.”
That chain of ownership is critical within the homeownership process. At the end of that chain of ownership is you, the potential home buyer – and in order to make sure everything is okay for you to purchase, all of the transfers and transactions that have come before you need to get examined.
Sounds pretty simple, right? After all, everyone that owned the house before you must have had the rights to sell it – otherwise, it wouldn’t have worked, right?
It’s anything but simple. As we’ll discuss in the next section, there are a vast array of things that can actually “trip up” the chain of ownership process and cause things to go awry. The real estate title search might turn up things that could put your purchase of the home in peril.
How a Real Estate Title Search Works
First, let’s detail this important aspect: you absolutely don’t have to go through a time consuming search through the records of every previous owner yourself. Buying a home is a tremendously stressful time anyways; the property title search will get accomplished by a different professional party. A professional title company or real estate attorney will most likely execute the real estate title search themselves.
They’ll look through public records, explore the marketable title and abstract of title, examine legal documents, property taxes, and title plants, and investigate every previous owner to make sure that the chain of title is in place and secure.
Sounds like a long and tedious job, right? It’s well worth it to get the peace of mind that everything is free and clear with the property. However – there is always the chance that the property title search can actually turn up some title problems that can derail the process of buying a home. Here are some of the more common ones:
- Liens on the property. Liens or debts outstanding on the property – ones that may exist before from contractors or other services, for example – can easily transfer over from a prior owner to a current owner. After spending all of that money on the home, the last thing a new owner wants to do is move into their dream location and get hit with the bill for something the previous owner purchased.
- Owed property taxes or other taxes. Just as liens and debts on the property could pile up, so could those pesky “taxes.” If a previous owner did not fully fulfill their tax obligations, there’s always a chance that the burden could fall on the new owner. Again, not the most pleasant surprise for a brand-new property.
- Forgeries and impersonations. As we’ve said, the chain of title is a very, very long one that can go back generations. Throughout all of those years, there is the chance that the chain of title could get disrupted by a forged recorded document or other legal documents – or even someone impersonating an owner. This may sound like the work of cheap fiction, but these types of scenarios do happen.
- Unexpected heirs or other owners. That long chain of title can have plenty of surprises inside it. Who knows what (or more accurately, who) might pop up in the course of a title search? Someone may have inherited the place meant to go to another family member. There may be a different owner who could claim the property (perhaps lost as part of a divorce, for example). Any one of those unexpected surprises can be deadly for the home ownership process.
Who Pays for a Real Estate Title Search?
As real estate agents will tell you, the person that will pay for the real estate agent will (generally) end up being the person purchasing the property. The most likely scenario is that the mortgage lender will require you to purchase title insurance for the property and will organize the title company or real estate attorney to do the search themselves. Title insurance protects the property lender just in case something does come up in the real estate title search.
So, you will have to write out a little bit more from the bank account when it comes to the real estate title search process. One caveat, though: if you really don’t want to pay for this, try negotiating the price with the owner as part of the purchase. Every transaction is different, but motivated sellers might include that price in their cost.
How LemonBrew Can Help
Now that we’ve summarized how a real estate title search works, what’s next? Well, we know how confusing and challenging understanding your real estate title policy (and everything else related to homeownership) is. Here’s the good news, though – LemonBrew is ready to help! If you’d like a helping hand through your real estate title search, or anything else related to your real estate title policy, go ahead and visit our in-depth LemonBrew Abstract site. There, you’ll find the innovative title and escrow services you need to make your real estate title search as painless as it can be.
Seeking out some more guidance through the homeownership process? Whether you’re a first-time buyer, experienced homeowner, real estate agent, or just interested in the process, LemonBrew provides a helpful guide to everything related to the transaction – including the real estate title search and much, much more.
One more thing to know about LemonBrew! We’ve got all the resources needed to perform a “deep dive” into home ownership. Go ahead and visit the LemonBrew real estate blog, with a huge library of everything related to real estate. Go ahead and read our titles, including “What Do I Need to Buy a House?“, “The 10 Most Common Problems Found in a Property Title Search,” and “Five Ways to Save Money on Title Insurance.” Read those and many more here!
