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Who, What, Why?

Who needs a title search?

Reports in the form of a title abstract, or abstract of title, are used by owners, sellers, buyers, lenders, real estate agents, and attorneys to evaluate real property and determine whether there are any title defects. This exam is a methodical search through public records to uncover any recorded legal interests in the property. All involved parties should be certain that the seller has the legal right to sell the property. In addition, make sure that the property is unencumbered by claims or liens, such as, city or county liens, liens filed by those who worked on the property and did not receive full payment, liens for unpaid utility bills or condominium maintenance fees, mortgages, and other judgments that may attach. Other legal issues need to be brought to light as well. In these rare cases, alternative or “wild” deeds may have been recorded that may be the result of mistake or fraud. A thorough review of the county records will provide information regarding the marketability of property. Without proper and accurate title examinations, all parties could be subjecting themselves to future liability and/or losses.

Another frequent user of a title search are Investors looking at properties for purchase through foreclosure, tax sales, and/or at auction. These potential buyers wish to determine the status of any liens that may be on the property. Other clients are individuals hunting for property who want to understand the ownership of a property before they make an offer on it to the seller or broker. Sometimes, knowing the amount of mortgages on a property, or if there are financial problems, can help with the negotiations. Also, you may request a comparable search to see what other properties in the area have sold for. In addition, some of our clients need title searching as part of a family event, such as divorce, estate or otherwise. Some homeowners are now checking their own homes title status on a regular basis, to make sure no liens are attaching to the property.

Why do I need a title search?

Defects of title are said to cause a 'cloud on title' and an abstract report derived from a 'title search' will illuminate such defects. This will alert potential buyers, insurers, lenders and investors of problems in the 'chain of title', and of other liens and encumbrances that hinder a clear title. As a result of this abstract report, informed decisions can then be made as to how to proceed in clearing these clouds and selling a free and clear property.

A title search is a Confidence Check on a property in question to determine from the public land records what rights there are to the property which you are about to purchase and who owns those rights.

What would be the worst case if you don't order a title search?

Let us present an example. A young investor decides to buy a property at the foreclosure auction. Extremely excited, our investor sees a low price of ownership published in the auction papers, far below the market price, and after driving around the property to evaluate the physical condition and the overall state of the property, decides to buy the property. At the day of the foreclosure auction, our investor bids and purchases the property.

Our investor made a common mistake by not getting a title search before the purchase to find open liens against the property. Unfortunately, people who previously owned the property had numerous federal and state liens against the property. It’s not commonly known that most liens stay with the property, not owners, therefore, our young investor became liable to pay off someone else’s debt to the state and federal governments to clear the property title. The investor's life changed to a life of battles in the courts and filing lawsuits.

What would happen if the investor ordered a title search before the foreclosure auction?

It's very simple. The investor would have found out all of the liens against the property and saw that they were much greater then the property's market value. He would of then made an educated decision to not purchase the property.