Title search
Encyclopedia
A title search is a process that is performed primarily to determine the answer to three questions:
Anyone may do a title search and documents concerning conveyances of land are a matter of public record. However, it is often the case that people choose to contact a title company or attorney to conduct an exhaustive title search. For example, a title report may also show any easements, or recorded legal rights to the property or portions of the property. A previous owner may have legally given a neighbor the right to share the driveway, or the city may have a right to strips of the property for putting power lines, communication lines, water pipes, or sewer pipes. A few on-line services offer title searches for relatively little cost, and their accuracy is not inferior to what a title company or attorney will offer; however on-line businesses rely mostly on electronically available information, and for that reason could at times be limited.
In the United States, the buyer of a property will usually purchase title insurance
, which protects the buyer from any title problems that may arise after sale (such as liens that were missed during the title search). The title insurance company issues a report and issues an insurance policy in support of its findings. However, title searches are most often carried out before contracting is completed between parties and sometimes during the escrow
phase of a closing.
A title search is also performed when an owner of a certain real property wishes to mortgage his property and the bank requires from owner to insure their transaction.
Generally, there are two main types of title searching, a full coverage search and limited coverage search; other types include non-insured reports and foreclosure guarantee search.
s. It generally includes searches related to property lien
, easement
s, covenants, conditions and restrictions(CC&Rs)
, agreements
, resolutions
and ordinances
that will affect the real property
in question.
loans and for making simple title guarantee reports.
This kind of title searching usually includes searches for property liens, liens against the owner and the other parties on title and search for bankruptcy
proceedings against the owner of the property.
If the current property owner had a single lender, then the amount you see at the foreclosure auction might be the only debt against this property (key word is might). In the case where the current owner had, say, a home equity loan in addition to home mortgage(s), there may be two or more liens against the property from different mortgage lenders. Whichever lender files “notice of default” first and puts a lien against the property gets to foreclose on the property first. The payout from foreclosure action to lenders or government always happens in order of court filing. The only way for you, as an investor, to find out what liens, mortgages, debts exist against the property is to order a Property Title search.
Foreclosure auctions (sometimes called sheriff’s sale) are typically held in the municipal (county) courts. The County does not offer you any protection against additional liens on the property, nor do they guarantee you a clean title.
- Does the seller have a saleable interest in the property?
- What kind of restrictions or allowances pertain to the use of the land (real covenantReal CovenantA real covenant is a term used in real property law to describe a promise concerning the use of land. Real covenants are classified as either affirmative, a promise to do something or negative, a promise to not do something A real covenant is a term used in real property law to describe a promise...
s, easements, or other servitudeServitudeServitude may refer to:* Service* Conscription* Employment* Slavery* Indentured servitude* Involuntary servitude* Penal servitude* Servitude * Equitable servitude, a term of real estate law* Servitude in civil law...
s)? - Do any liens exist on the property which need to be paid off at closing (mortgagesMortgage loanA mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
, back taxes, mechanic's liens, or other assessments)?
Anyone may do a title search and documents concerning conveyances of land are a matter of public record. However, it is often the case that people choose to contact a title company or attorney to conduct an exhaustive title search. For example, a title report may also show any easements, or recorded legal rights to the property or portions of the property. A previous owner may have legally given a neighbor the right to share the driveway, or the city may have a right to strips of the property for putting power lines, communication lines, water pipes, or sewer pipes. A few on-line services offer title searches for relatively little cost, and their accuracy is not inferior to what a title company or attorney will offer; however on-line businesses rely mostly on electronically available information, and for that reason could at times be limited.
In the United States, the buyer of a property will usually purchase title insurance
Title insurance
Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. Title insurance is principally a product developed and sold in the...
, which protects the buyer from any title problems that may arise after sale (such as liens that were missed during the title search). The title insurance company issues a report and issues an insurance policy in support of its findings. However, title searches are most often carried out before contracting is completed between parties and sometimes during the escrow
Escrow
An escrow is:* an arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party receives and disburses money and/or documents for the transacting parties, with the timing of such disbursement by the third party dependent on the fulfillment of...
phase of a closing.
A title search is also performed when an owner of a certain real property wishes to mortgage his property and the bank requires from owner to insure their transaction.
Generally, there are two main types of title searching, a full coverage search and limited coverage search; other types include non-insured reports and foreclosure guarantee search.
Full coverage search
A full coverage search is usually done when creating a title report for sale/resale transactions and for transaction that involves construction loanConstruction loan
In the broadest sense of the term, a Construction Loan is any loan where the proceeds are used to finance construction of some kind. In the United States Financial Services industry however, the term is used to describe a genre of loans designed for construction and containing features such as...
s. It generally includes searches related to property lien
Lien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation...
, easement
Easement
An easement is a certain right to use the real property of another without possessing it.Easements are helpful for providing pathways across two or more pieces of property or allowing an individual to fish in a privately owned pond...
s, covenants, conditions and restrictions(CC&Rs)
Restrictive covenant
A restrictive covenant is a type of real covenant, a legal obligation imposed in a deed by the seller upon the buyer of real estate to do or not to do something. Such restrictions frequently "run with the land" and are enforceable on subsequent buyers of the property...
, agreements
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
, resolutions
Resolution (law)
A resolution is a written motion adopted by a deliberative body. The substance of the resolution can be anything that can normally be proposed as a motion. For long or important motions, though, it is often better to have them written out so that discussion is easier or so that it can be...
and ordinances
Local ordinance
A local ordinance is a law usually found in a municipal code.-United States:In the United States, these laws are enforced locally in addition to state law and federal law.-Japan:...
that will affect the real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
in question.
- Search for liens against the owner and the other parties on title.
- Search for liens against the buyer (for sale transactions only).
- Search for BankruptcyBankruptcyBankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
proceedings against the owner of the property.
- Search for liens against the buyer is not something that is covered in a title search.
Limited coverage search
A limited coverage search is usually making title reports for refinance transactions that involves ownership equityOwnership equity
In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...
loans and for making simple title guarantee reports.
This kind of title searching usually includes searches for property liens, liens against the owner and the other parties on title and search for bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
proceedings against the owner of the property.
Non-insured reports
There are a variety of title searches which provide the customer with a report, but no insurance. These are for informational purposes only, and are called by a variety of names, such as Lot Book Report, Plat Certificate, 300-foot Radius Report, and others. These informational searches are used mainly in two instances:- ProbateProbateProbate is the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person's property under the valid will. A probate court decides the validity of a testator's will...
. This is when a family, lawyer, or court is dividing up the property of a deceased person. Heirs will want to know what liens they are taking on and who has rights to the land. - SubdividingSubdivision (land)Subdivision is the act of dividing land into pieces that are easier to sell or otherwise develop, usually via a plat. The former single piece as a whole is then known in the United States as a subdivision...
. To create a subdivision, a person takes land previously platted (legally named and recorded) under another name and renames and re plats it as a new development or subdivision. A report must be given to the city, showing taxes paid and no liens. The owner can then sell the lots individually or en masse, and may record Covenants, Conditions, and Restrictions, which govern how residents may construct their houses or yards, and may limit other activities. Many subdivisions have noise, pet, and trash laws as well.
Foreclosure guarantee search
A foreclosure guarantee is a type of report (e.g. trustees sale guarantee, judicial foreclosure guarantee and litigation guarantee) that is used mainly for foreclosing an encumbrances (or a lien) in a certain property. The title searcher will perform a full coverage search to the property in default and a search for the addresses of the lien holders to the property in default. The addresses will be used for sending copies of the notice of foreclosure letters (such as notice of trustees sale, etc.) to the lien holders to the property in default.Property Title Search before Foreclosure Sale
Let’s first understand how the property happened to be in foreclosure. A common reason is that current owners did not pay their mortgage or tax bills on-time, causing bank or municipal/state/federal government to place a lien against the property, in other words, the mortgage lender or government wants to get payment on the current owner’s obligations by any means, even if they have to go through the foreclosure expense and auction the house to recover the owed amount or gain possession of the house to sell it latest via real estate agency (REO properties).If the current property owner had a single lender, then the amount you see at the foreclosure auction might be the only debt against this property (key word is might). In the case where the current owner had, say, a home equity loan in addition to home mortgage(s), there may be two or more liens against the property from different mortgage lenders. Whichever lender files “notice of default” first and puts a lien against the property gets to foreclose on the property first. The payout from foreclosure action to lenders or government always happens in order of court filing. The only way for you, as an investor, to find out what liens, mortgages, debts exist against the property is to order a Property Title search.
Foreclosure auctions (sometimes called sheriff’s sale) are typically held in the municipal (county) courts. The County does not offer you any protection against additional liens on the property, nor do they guarantee you a clean title.