What is a Title Search?

Perhaps the most overlooked and least understood aspect of buying a home is the title search. The homebuyer has researched and inspected several properties before deciding on a property to purchase. The homebuyer has gone through the process of setting up financing. Add in the countless other decisions a homebuyer must make, and no wonder the title search is seen as a formality to a purchase rather than a foundation of the real estate transaction.

The most important question a homebuyer should ask in a real estate transaction is whether title to the property is “good.” The bank lending the buyer the money will most certainly be asking this question. A title search of the property provides an answer for both parties. Without this information the entire transaction could be doomed.

A title search will give the history of a property for a specific period of time. Just like you can order a vehicle history report from CarFax, you can order a property history report with a title search. A clean report from CarFax enables a buyer to purchase a used car with peace of mind. Similarly, a title search facilitates a smooth and effective transfer of ownership of a property. A title search identifies the owner of the property and reveals any liens or other interests encumbering ownership.

Once the contract between the buyer and seller has been signed and the financing lined up, the attorney representing the buyer will order the title search. The attorney may perform the search personally or order a search through a title insurance company. The title insurance company then assigns the order to one of its in-house searchers or to an independent title searcher. The search itself is an investigation of the land records in the town where the property is located. In certain instances a title searcher will need to check the probate or courthouse records for a particular search.

The title searcher traces the history of the land by examining the deed transfers from one former owner to another or by examining the probate documents in cases where someone died owning the land. Just like there are no two snowflakes exactly alike, no two title searches are the same. A thorough and complete title search for one property may take a few hours, whereas the same effort may take two days for another property. The size and shape of the land often changes through the passage of time, and many times the deeds and probate proceedings involved in real estate transactions are flawed.

Deeds, especially older deeds, often describe land so ambiguously that it is difficult to ascertain whether it is the property you are supposed to be searching. Older deeds commonly use physical monuments or former landowners to lay out the boundaries of a property. For example, an older deed may describe the property this way: “North by the road, east by land of Stevenson, south by a stone wall, and west by land of Johnson.” Many years later the road and neighboring landowner may have changed names and the stone wall fallen down. Most of the searches encountered today involve subdivided lots that came from much bigger tracts of land. A title searcher must be able to read and use survey maps to overcome these obstacles.

The title searcher is a hunter and gatherer. What is found during the title search must be reported to the attorney responsible for examining the title. The examining attorney will review the title search to draw a legal conclusion and form an opinion concerning the status of title. The attorney will note any mortgages or liens that need to be paid before title is transferred. The attorney will also look for any issues affecting title, to be sure they are cleared up before a client takes title to the property. It is extremely important that the title searcher recognize and report not only the usual findings but also any unusual things that the attorney will need when examining the title. The title searcher may not know if something affects the property being searched, and therefore it is in the property buyer’s best interest for the searcher to err on the side of caution and report everything. I liken the job of a title searcher to that of Fox News; “We report, and you decide.” The “you” is the examining attorney.

The purchase of a home is the biggest monetary investment most people will ever make. It is an especially important milestone for those whose purchase represents their first time owning a home. A title search uncovers any restrictions that may hinder your use and enjoyment of your property and ensures that the buyers are taking title to the property “free and clear of all encumbrances.” At least that’s the theory. It is meant you will be buying a property with no open mortgages or liens from a prior owner. Some encumbrances are necessary and will always remain on the title to your property. Common examples are utility, water, and sewer company easements.

Liens, encumbrances and restrictions highlight the need for a title search with each successive transfer of a property. The title search gives the buyers an accurate physical description of what they will be purchasing as well as any conditions or restrictions that come with the property. The importance of the search cannot be understated. A mechanic’s lien or unpaid taxes are examples of problems that can arise after the closing as a result of a defective title search. Problems like these can often be resolved by the parties involved; however, some issues, such as boundary disputes and appurtenant easements can take years and lots of money to resolve. What may seem minor to one property owner can be a major headache to another.

A title problem can affect your ability to obtain financing and transfer ownership. Banks will require the homeowner to have a lender’s insurance policy. A lender’s policy protects only the bank. The homebuyers have the option of purchasing an owner’s policy, which protects their interest in the property, but even with title insurance, a title issue can drag on and test the patience of even the calmest property owner.

Finding a problem or potential problem with a piece of property and remedying it before ownership changes hands is always the best solution. The process of buying a home can be a wonderful and maddening process at the same time. Being able to say that your home is truly your castle and not someone else’s is priceless. That is why a title search is an extremely important foundation of any real estate transaction.

John Harlow is the owner of New England Abstract a real estate title searching company located in Wallingford, Connecticut. He can be reached at 203-269-9600 or by E-Mail at jharlow@newenglandabstract.com.