What Steps Are Involved in a Title Search?

A title search is a crucial process in real estate transactions, ensuring that a property is free from legal issues and can be sold or purchased without complications. Here’s a breakdown of the steps involved:

1. Research Public Records for Errors and Liens

   • Public records are scrutinized for any mistakes or outstanding financial claims against the property. This includes unrecorded mortgages, which can leave hidden liens. Also, if previous owners defaulted on payments to contractors, it might result in liens. The goal is to gather all necessary information from historical documents to confirm whether any liens are present and ensure that past errors or fraudulent entries aren’t legally enforceable.

2. Verify Boundaries and Legal Descriptions

   • Understanding the exact dimensions and legal boundaries of the property is crucial. The title search involves confirming the property lines and any easements, which are rights allowing others to use parts of the property. This step helps prevent potential disputes with neighbors over property boundaries.

3. Investigate Fraud and Missing Heirs

   • This step involves checking for any illegal activities, such as forged deeds or impersonations, and making sure that ownership transfers are legitimate. An important part of this process is identifying any missing heirs who may have a claim to the property. This requires analyzing legal documents, including quitclaims, and following state laws to ensure all heirs are aware and have provided necessary documentation to relinquish their claims.

By meticulously examining these areas, the title search provides assurance to all parties that the property’s title is valid and free from unforeseen legal troubles.

Understanding Title Insurance: Types and Differences

Title insurance is crucial in safeguarding your investment when purchasing a home. There are two primary types: owner's title insurance and lender's title insurance. Here’s how they differ and why each might be relevant to you.

Owner's Title Insurance

• Optional but Recommended: While not mandatory, owner’s title insurance is highly recommended if you are buying a home without a mortgage. It ensures your financial protection against potential title issues like undiscovered liens or errors in public records.
• Coverage Focus: This policy covers the home's purchase price and shields you from financial loss. It’s designed to protect your interests as the homeowner.
• Duration of Coverage: As the homeowner, you enjoy coverage for as long as you own the property. This extends even if you decide to refinance your mortgage, offering lifetime peace of mind.

Lender's Title Insurance

• Mandatory for Borrowers: Unlike owner’s title insurance, lender's title insurance is a requirement set by mortgage lenders. They necessitate this to protect their investment in the property.
• Coverage Specifics: It covers the lender only, up to the total mortgage amount. While it safeguards the lender's stake, it offers you no personal protection.
• Term of Coverage: This type of policy lasts until you fully pay off your mortgage, ensuring the lender’s interests are secure throughout the lending period.

By understanding both types of title insurance, you can make informed decisions about your real estate investments. Owner’s insurance provides comprehensive coverage for your property rights, while lender’s insurance protects the financial institution involved in your mortgage.

What's Included in a Title Commitment or Preliminary Title Report?

A title commitment, also known as a preliminary title report, is an essential document in the real estate transaction process. It gathers all the necessary information a title company has researched to ensure the property can be insured. This report typically consists of three key sections.

Schedule A: The Essentials

Schedule A provides a comprehensive overview of the transaction details. This section covers:

• The date the title was certified
• Information on the parties being insured
• The type and value of the insurance policy
• How the current owners hold the title, known as title vesting

Schedule B-1: Requirements for Assurance

Before the title insurance can be issued, specific documents must be provided. Schedule B-1 highlights these requirements, which may include:

• Tax lien releases
• Deeds of trust from previous owners
• Estate-related legal documents
• Powers of attorney
• Death certificates for any deceased owners
• Necessary judgments and document corrections

Schedule B-2: Understanding the Exceptions

This section outlines what the title insurance will not cover. Common exceptions might involve:

• Easements, which allow others to use portions of the property
• Mineral rights, which someone else may own
• Covenants, conditions, and restrictions (CC&Rs) set by previous landowners

In short, the title commitment is a roadmap for understanding any potential issues that might affect your ownership and proactively resolving them, ensuring a smoother transaction process.