If you’re buying your first home, you’re probably focused on getting the right amount of rooms and bathrooms, finding the right location, and finding a lender. Unfortunately, those aren’t the most important aspects of the home buying process.
You may find a home you love and can afford, but all that can come crashing down if you don’t do a title search. Keep reading to find out why this is so important and the title search process.
What is a Title Search?
A title search is a process of looking at in-depth public records of a house. This process isn’t necessary, but it should be number one on your home buying to-do list. This is how you can verify the current owner is the one on the deed.
That’s not the only benefit it offers, though. When answering the question, “What is a title search?”, it’s essential to know the potential repercussions of not doing one.
There is a lot of valuable information a title search can provide that will prevent any legal or financial complications in the future from things like property tax liens or estate claims.
The Title Search Process
Doing a title search is a relatively simple process; it just takes some investigative skills. Depending on how you decide to go about it, the entire process is affordable and sometimes free.
Start your search by following these simple steps.
Check the Assessor’s Records
In order to get a thorough picture of your potential home’s history, you will need to gather as much information about the house and current owner as possible.
You can find everything you need by visiting your county or city’s tax assessor office or website. This is where you can find all the public information you need about the property and the current owner.
To access this information, you need the full address of the property. When you conduct your search, you’ll get a general description of the property, parcel number, lot number, tax history, and how much has been paid and unpaid on the property.
Search for the Property Deed
Once you’ve gathered the information you need, it’s time to find the current property deed. The home’s deed is the document that shows proof that the title was transferred through the sale of a home.
This step can typically be done online since most states provide access for a small fee, but often for free. Find the most recent deed and verify that the owner’s name matches the paperwork.
From there, you’ll want to find the past 50 to 70 year’s worth of deeds. Doing so will ensure you know that the title has been passed from owner to owner correctly over the years.
Create a Chain of Title
Most houses go through several owners, which means there have been different title transactions. Creating a chain of the title builds off of the property deed research you’ve already done.
To complete this step, start with the current owner and work your way back. Create a chart with three columns labeled deed, seller, and buyer. This chart will make it easier to recognize if there have been any gaps in ownership.
If you do find any dates that don’t add up, that’s a red flag. Either somebody recorded the deed incorrectly, or a previous owner fraudulently registered their name, which can prevent the owner from legally selling you the home.
What to Look For
Finding a break in the title chain is only one red flag, but a home’s title could have other problems even with perfect title history. Now it’s time to do the real work and find out if there is any problematic financial history linked to the property.
If the home is up for sale due to the homeowner’s inability to pay property taxes, the title will have a tax foreclosure lien. You’ll get this along with the information you get from the tax assessor’s office.
A tax lien can mean trouble since outstanding taxes on a property could be transferred to a new owner. On top of that, the county or state could put the home up for sale if the taxes are significant, even if the new owner isn’t responsible.
A judgment lien can happen if a previous owner has gotten too far behind on their mortgage payment. By failing to comply with the mortgage contract, a court can rule that gives the creditor the right to their property, including their home.
Judgment liens are considered a defect on a title that must get resolved before you can get approved for a mortgage. If you find a judgment on the title, ask the current owner to contact the lender to learn how to clear it.
If the previous homeowner is deceased, there is a possibility of the property getting listed in an estate claim. An estate claim can come about if anyone feels they are entitled to the decedent’s property, which can include the home you’re considering.
Hiring a Title Search Attorney
Although anyone can do a home title search, it’s still a good idea to hire a title attorney. That’s because not all states prevent the sale of homes with financial restrictions.
Working with a lawyer can help you avoid any pitfalls even after doing your title search. If you don’t think hiring an attorney will be necessary, it’s useful to at least consult one. This way, you can get advice on how to proceed.
Getting Title Insurance
Purchasing a home is costly enough, so spending more on title insurance might seem unnecessary. However, this wise investment could protect against the above problems you could find with your title search.
For example, if you buy a house from someone who co-owned it, title insurance will protect you from losing your investment. If interested, your real estate agent can help find the right insurance for you.
Get the Home of Your Dreams
Doing a home title search can take a little time, but it’s well worth the effort to know that your dream house has a clean title. To learn more about investing in a home, check out some of our other articles now!