Thinking of buying a house? Then you better make sure the seller is able to sell it to you…
When I bought my first house, a lot of the process felt confusing. There were so many moving pieces that I simply did what my agent and lender told me to.
If you’re new to real estate, you might feel confused too.
While many buyers and sellers alike feel confusion regarding title, a title search should always be done when buying or selling a house.
Can you buy a house without opening title on it? Technically, yes. But there are many reasons home buyers should always open title on a house.
A Title Search Answers Three Crucial Questions
A title search answers 3 crucial questions about the property:
- Does the seller have the ability to sell the house free and clear?
- Does the house have any liens on it, and will any of the liens prevent the sale of the house?
- Are there any allowances or restrictions on the property, such as Homeowner’s Association regulations, public easements, etc.?
Below, we go into each of these questions in more detail.
What Is A Title Search?
Before going into detail about what a title search reveals, what is a title search?
A title search in real estate involves the process of researching and finding any documents related to ownership and interests of the property being searched.
Usually a title search is done when a buyer is considering buying a property, which is why if title issues arise, often all the moving pieces of a property sale are halted until resolutions are likely.
Documents concerning ownership of land and property are public record and can be found in a centralized government office (like a county courthouse). But while technically these records are available publicly, it is highly recommended that you work with a lawyer or title company when doing a title search
Does The Seller Own The House?
Obtaining a clear title is important during a real estate transaction because it means that the person selling the house has the right to sell it and transfer title to you.
Think about it: a person can’t sell something they legally don’t own.
It sounds simple, but its extremely common in real estate that sellers lack an understanding of title—and whether or not they actually own the home.
This is especially common when houses are inherited. A family passes away without a will, and somewhere along the way, paperwork wasn’t filed to give the next person the legal right to the house.
As a buyer, the last thing you want is to buy a house that YOU then don’t actually own.
Does The House Have Liens?
The important benefits of doing a title search go even beyond ownership. Big State Home Buyers defines a lien as “a legal claim of debt against a property until the debt is satisfied. On the surface, most cases liens prevent the sale of a house.”
For example, when you obtain a mortgage from a lender for purchasing a house, the lender places a files a lien against the property. The lender then removes the lien once you pay the full debt.
If a title search reveals liens on the property, the seller must pay them before having the ability to sell.
Does The House Have Restrictions?
Another questions title searches reveal involves whether or not the house includes restrictions or allowances. If the house has a restriction such as easements, then non-owners must be granted access to the property.
For example, a utility company might retain the right to enter a yard to access pipes. Or, a Homeowner’s Association may (Simply put, an easement describes the legal right of a second party to make limited use of another person’s property.
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