What actually goes on in a title search? The outcome of this process can be the defining moment in a property deal, yet many agents remain in the dark about what’s actually being “searched.” In this blog post, we will explore the five essential steps of a title search in real estate. Each step plays a crucial role in uncovering potential problems and ensuring a smooth and legally sound closing process.
Step 1: Tax History and Maps
The first step in a title search involves delving into the tax history and maps associated with the subject property. This step serves as a foundation for verifying ownership from a tax perspective and understanding the property’s location and boundaries. Here’s what you need to look for:
Ownership Verification: Examine tax records to confirm whether the seller is the rightful owner of the property. This verification helps identify any early red flags.
Tax Payments: Check if property taxes have been paid up to date or if there are any outstanding tax payments. Additionally, look for any tax exemptions or deferments that may apply.
Parcel Location and Boundaries: Utilize map data to determine the property’s location and approximate boundary lines as recorded by the county.
Step 2: Deed Search
The second step involves a meticulous deed search, where you trace back the chain of title to establish the current owner’s legitimacy. Depending on your requirements, you may need to go back several decades and examine multiple deeds. Here’s what you should focus on:
Ownership Verification: Confirm whether the seller is the current owner by examining deeds in the chain of title. Examine records of past property owners over the desired time frame (e.g., 30 years).
Compliance with Legal Requirements: Ensure that each deed in the chain of title meets all legal requirements. Watch out for missing signatures or potential issues with heirs’ signatures.
Step 3: Public Records Search
The third step takes you to the local Register of Deeds office, where you review public records related to the property. This comprehensive search is crucial for identifying various aspects of the property’s history and any potential encumbrances. Here you will want to identify any mortgages or other filings against the property. This includes documents such as declarations of covenants and restrictions, easements, boundary line agreements, and other pertinent records that shed light on the property’s legal standing.
Step 4: Judgment Search
The fourth step introduces a judgment search, which aims to determine if there are any outstanding judgments or liens against the property. This crucial step ensures that the property’s title remains clear of any financial obligations or legal entanglements. This search helps uncover the existence of various judgments, including tax liens and personal judgments, such as those related to credit cards. It serves as a critical checkpoint to ensure that the seller is transparent about any financial obligations. The presence of judgments can significantly impact the transaction. In some cases, sellers may need to allocate funds from the sale to satisfy these obligations, which can affect the closing process.
Step 5: Bankruptcy Search
The final step in the title search process involves conducting a bankruptcy search to ascertain whether the seller or any previous sellers are currently or have been in bankruptcy. This step is crucial to prevent complications that could arise from property-related bankruptcy issues. In cases where property was conveyed during bankruptcy, it’s essential to ensure that such transactions were permissible and compliant with bankruptcy laws. As active bankruptcy proceedings can lead to delays in the closing process, Sellers must be forthcoming about their bankruptcy status to avoid unexpected setbacks.
In the realm of real estate law, conducting a thorough title search is not just a best practice but a legal necessity. Each of the five steps in the title search process plays a unique role in verifying property ownership, uncovering potential issues, and ensuring that the title remains clear and free of encumbrances. By meticulously following these steps, real estate lawyers can safeguard their clients’ interests and facilitate smooth, legally sound property transactions
Thomas & Webber Law at the Lake
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