{"id":1202,"date":"2021-01-22T06:00:47","date_gmt":"2021-01-22T11:00:47","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1202"},"modified":"2024-04-26T06:17:15","modified_gmt":"2024-04-26T10:17:15","slug":"frequently-asked-title-research-questions","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/frequently-asked-title-research-questions\/","title":{"rendered":"Frequently Asked Title Search Questions"},"content":{"rendered":"\n
While\nyou’re taking out a mortgage loan and buying a house, vital tasks happen behind\nthe scenes. One of those tasks is the title search. And you might be asking…<\/p>\n\n\n\n
What’s the point of a title search?<\/strong><\/p>\n\n\n\n You’ve\nmade an offer and you hope to get to the closing table quickly. But before you\ncan have the title transferred into your name, the seller’s full rights to\nconvey ownership have to be vetted. The title search makes sure you can\nactually receive the deed free and clear \u2014 and, in turn, enjoy full\nownership rights. <\/p>\n\n\n\n\n\n\n\n What’s being vetted?<\/strong><\/p>\n\n\n\n Title\ncompanies scour public records, looking for issues (“defects”) in the\nchain of title, burdens (“encumbrances”), or claims concerning a\nproperty. The search goes back to the original deed or as far as records allow,\naffirming the integrity of the chain of title<\/a>. <\/p>\n\n\n\n After the\nsearch, the title company presents the interested parties with its results. The\nseller, buyer, and their agents, the mortgage company… All will receive the\npreliminary title report. <\/p>\n\n\n\n What issues could the title search spot?<\/strong> <\/p>\n\n\n\n Perhaps\nthe search will uncover evidence of a long-ago unrecorded conveyance, which\nclouded the title or broke its chain. Perhaps something is missing in the\ndeed’s legal description of the property. <\/p>\n\n\n\n There\nmight be outstanding loans secured by the property, or charges owed for city\nservices. Construction or repair workers might have placed mechanics’ liens<\/em> on the home. <\/p>\n\n\n\n The\nsearch will find probate decisions, divorce court orders and child support\nliens, unpaid homeowners’ association dues \u2014\nany monetary judgments against seller. <\/p>\n\n\n\n What other value does a title search have?<\/strong><\/p>\n\n\n\n Search\nresults provide information about deed restrictions that limit what can be put\non the property, and things like height and style of any structures a buyer\nmight hope to add. Deed restrictions can keep owners from activities like\nerecting fences, parking cars out in front, having dogs, or managing certain\nhome businesses. Their purpose often involves aesthetics and keeping property\nvalues up. <\/p>\n\n\n\n Is there any checking how much property is actually there?<\/strong><\/p>\n\n\n\n Yes, the\ntitle company is careful to extend insurance to the precise area, checking for\nencroachments and easements on the land. (An encroachment is a structure that\nintrudes on the property from outside its boundaries, and an easement is\nanother party’s right of way across the property.) Part of the work involves\nusing special software to check the property survey, including the surveyor’s\nfield notes, so that the correct spaces and boundaries are present and\naccounted for.<\/p>\n\n\n\n What kind of encroachments or easements might be\nproblematic?<\/strong><\/p>\n\n\n\n Imagine\nif the survey observes an electrical tower on the land, but no easement is\nfound in the county records. Or perhaps there’s an equestrian trail but no\nmatching easement. <\/p>\n\n\n\n In a\nquite common situation, the driveway put in by the homeowner next door extends\nover the boundary line recorded in the deed. Did the owners agree to this, but\nneglect to record their agreement? The title company has to reconcile these\nquestions before closing. <\/p>\n\n\n\n If the search uncovers a serious problem, could the buyer\nback out?<\/strong><\/p>\n\n\n\n Some\nclaims on the title, such as a property tax bill or an unpaid electric bill,\ncan be resolved by the owner. The mortgage lien can be resolved by a payoff\nfrom the home sale proceeds. But things like undisclosed easements, if they’re\nintrusive, could be deal breakers. The buyer can cite marketability of title <\/em>contingencies in the purchase agreement to\nback out of the deal prior to closing. <\/p>\n\n\n\n In some\ntransactions, such as foreclosure sales, defects in the chain of title are no\nsurprise, and the title company works to cure them. Most of this important work\nis done behind the scenes. <\/p>\n\n\n\n In other\ncases, some title defect from the past catches the seller unprepared. When the\nbuyer and seller fail to work out a remedy, negotiations can break down.\nSometimes, backing out and getting the deposit back is the only reasonable\nchoice for the buyer. <\/p>\n\n\n\n Tough\nsituations may require a lawyer’s representation, to pursue a quiet title\naction in hopes of curing the defect. <\/p>\n\n\n\n Definition: <\/em><\/strong>A quiet title action is a\ncourt proceeding to determine rightful ownership, ensuring that the title is\nfree from conflicting claims. It can be filed by a mortgage lender, buyer,\nlegal title holder, or the party in possession of the property.<\/p>\n\n\n\n Do title issues often hold up closings often?<\/strong><\/p>\n\n\n\n In fact,\nthey do. Sometimes for a few days, sometimes much longer. Mechanics’ liens\nexpire after a certain time and can usually be cleared up, but tracking down\nthe contractor and dealing with the matter could delay a closing for weeks. <\/p>\n\n\n\n To get\nthe closing back on track when there’s some unresolved matter, a buyer needs to\nconsult with the real estate agent, and understand what action the purchase\ncontract permits. Sometimes the remedy is price negotiation, to allow the buyer\nto get through closing with funds to pay for a legal remedy. In other\nsituations the seller can quickly resolve a debt and closing can happen. <\/p>\n\n\n\n A\ncorrected deed might be necessary before closing if the seller can clear up the\ncloud. Sometimes title defects are cleared by recording a quitclaim deed<\/em>, to allow someone to relinquish a possible claim.\nSome are cured by filing a release<\/em> \u2014 of a paid off loan, for example, or a court-ordered lien\nfrom the past. <\/p>\n\n\n\n Is there anything a title company can’t find?<\/strong><\/p>\n\n\n\n Yes. The\npast sometimes complicates things. Maybe a legal spouse went unnoticed in the\nrecords, or a past owner’s rightful heirs were bypassed in probate. Someone\ncould have conveyed the property under a legal incapacity, an owner’s name\ncould have been forged. One spouse might have signed the other’s name. And so\non. <\/p>\n\n\n\n Title reports\nvary in their level of thoroughness and detail. Some title examiners (and the\nlenders who rely on them) look for everything that could possibly matter.\nOthers focus only on obvious defects. But even minor ambiguities in the chain\nof title should be resolved, so that all future transactions involving the\nproperty go through without trouble. <\/p>\n\n\n\n What happens if title problems exist, but are only\ndiscovered after the purchase?<\/strong><\/p>\n\n\n\n This is a\nmajor reason to have a title search. A completed search allows the property to\nbe insured on behalf of the mortgage lender. This way, the buyer can obtain the\nmortgage. And the lender gets coverage for title issues<\/a> that could arise later and\ncast legal doubt on the borrower’s free and clear ownership of the asset. <\/p>\n\n\n\n Does the title company cover the buyer<\/em> if title problems come up later?<\/strong><\/p>\n\n\n\n If the\nbuyer pays for it at closing, an owner’s\ntitle policy <\/em>can protect the buyer from unpleasant surprises down the road.\nThis policy is an added cost, and it’s optional. It’s available for a one-time\npayment, which typically amounts to a half or one percentage of the home’s\nprice, and there are no further premiums after that. <\/p>\n\n\n\n