Any property that is changing hands from seller to buyer requires a significant amount of paperwork. Amplify this if the property has been sold several times in the past, and it becomes easy to see how mistakes and unknown factors may build up over time.
If you are buying a property, it is wise to have a complete property search to make sure that there are no undisclosed elements that you could be responsible for, especially liens. Here’s what you need to know about the types of situations that a search could discover for you and how to go about the process.
What Is Involved in a Property Search?
A property search is a careful evaluation of the history of a property as traced back through its related documentation that has been filed over time. This type of search can produce a chain of title, or a detailed list of everyone who has owned the property, for how long and when it was bought and sold. A property search can also uncover judgments and other information related to the property including unpaid taxes, a mortgage tied to the property or any easements.
Property searches are good practice for anyone who is considering buying a home or plot of land. Without this information prior to settlement, the new owner could later find themselves responsible for prior debts associated with the property.
Can You Conduct a Property Search Yourself?
In most cases, anyone can conduct a limited property search for themselves depending on where they live, the time they have to dedicate to the process and their own acumen for this type of task. Most municipalities will allow residents to search their public records online. You will be looking for the county assessor or register of deeds to begin; however, you will need to know the address and the name of the current owner.
This type of search is basic and is often limited in the results that it can uncover. In order to more thoroughly complete the research, you will likely need the assistance of a title search company or an attorney.
What You May Discover During a Property Search
A property search will show you the chain of title, which is the history of who has owned the home. However, it can also uncover any judgments and unfavorable debt status related to the property. Primary among these is that the sale is or was not legal; for example, if the person who is selling the home committed fraud to be placed on the title, then they do not have the authority to sell the home to you. If you purchase it, you would not be the legal owner either.
More commonly, a title search will uncover liens, or a claim on all, or a portion, of the value of the home to cover a debt. Liens can come from:
- An unpaid mortgage
- Real estate taxes that are past due
- A judgment lien, when the owner owes a creditor who is trying to recover their money using the property
- A lien for work on the home that hasn’t been paid for
- A tax lien, when the owner owes income taxes to the IRS
The Importance of Title Insurance
Performing a property search is critical before you make your purchase, but even a search can miss claims, especially if they are still processing. This is why title insurance is a wise choice for any property purchase.
Title insurance protects the buyer against responsibility for liens that are discovered later, after closing. Without title insurance, you would be responsible for paying back the debts that are tied to the property, regardless of whether you had any hand in their creation. This can be an unfortunate surprise that may arise at any time after you have taken possession of the home.
Title insurance has other uses, too. It covers you for as long as you own the property, and it shields you from financial obligations such as legal fees to contest someone else’s claim on your home. For example, if an heir of the previous owner claims that they have a right to the property, title insurance can help you defend your ownership.
Trust the Professionals to Help You Navigate Title Issues
Buying a property is a big investment, and it is worth ensuring that such an investment is protected from unexpected challenges. A property search is a step in the right direction, but title insurance covers you against anything that the property search did not uncover.
The experts at Mathis Title Company can help you to choose the right type of title insurance coverage for your situation to keep your investment safe. Contact Mathis Title Company to learn more or to schedule an appointment to get started.