What is a Title Search? Is it really necessary and why do I need it?
Title searches are conducted for several important reasons in real estate transactions. One of the primary reasons for a title search is to confirm the current legal owner(s) of the property. Verifying ownership is essential to ensure that the seller has the legal right to transfer ownership to the buyer. Secondly, a title search helps uncover any outstanding liens, Deeds of Trusts, or other encumbrances that may exist against the property. These could include unpaid taxes, mechanic's liens, easements, or restrictions that may affect the property's title or use. Sometimes the search may reveal defects in the property's title, such as errors or discrepancies in previous conveyances, missing signatures, or unresolved legal claims. Identifying these defects before closing allows parties to address and resolve them to ensure a clear and marketable title. Conducting a title search helps mitigate the risk for both buyers and lenders involved in the transaction. By uncovering potential issues or defects in the title early on, parties can take appropriate steps to resolve them or obtain title insurance to protect against any future claims or losses. A clear and marketable title is essential for a property to be freely bought, sold, or financed without any legal complications. Title searches help ensure that the property's title is free from defects or encumbrances that could cloud ownership or impede future transactions.
Why is my lender requiring a Title Search?
Lenders typically require a title search to be conducted before approving a mortgage loan. This is to ensure that the property can serve as collateral for the loan and that the lender's interests are protected in case of default. Overall, title searches play a critical role in real estate transactions by assuring buyers, sellers, and lenders that the property's title is clear, marketable, and free from any undisclosed issues or defects. By identifying and addressing potential title issues upfront, parties can minimize risks and ensure a smoother and legally sound transfer of property ownership.
Why is My Settlement Agent asking all these questions to order the title search? Shouldn’t they already know this information?
Before conducting a title search, several preliminary documents and information are typically needed to initiate the process effectively. The first thing to usually be asked is to verify the current owner or owners of the property. This information helps in identifying the chain of title and searching for relevant documents. If you have changed your name, the records might still be in your original or maiden name. If you have recently acquired the property from a deceased loved one, the property may still be listed in their name. The jurisdiction’s Real Estate Office might not have gotten all the information from the Circuit Court Clerk’s Office to make the changes to your name yet.
Next, your Settlement Agent may ask for your Parcel ID Number, also referred to as a Tax ID Number. This number uniquely identifies the property within the jurisdiction's land records The specific address of your property may be assigned to one Parcel ID Number. Sometimes several Parcel ID numbers can make up the legal description your home is on. Your Settlement Agent will need to provide as much information to the Title Examiner as possible so all the property you are meaning to sell gets conveyed by the deed. In turn, you do not want to include property you do not mean to sell and want to keep.
If you have recently done a plat map or survey of the property please disclose that to the Settlement Agent immediately. The survey can outline the property's boundaries, dimensions, and any easements or encroachments affecting the land. This will greatly help the Title Examiner in focusing on important documents to search for and they will be able to more accurately tell if something might not have been properly recorded in the Circuit Court Clerk’s Office.
By gathering these preliminary documents and information, title searchers can efficiently navigate through public records and databases to compile a comprehensive report on the property's title history and identify any potential issues or encumbrances. This thorough examination helps ensure a smooth and legally sound real estate transaction for all parties involved.