When you close on a home, you’ll receive a variety of documents, including a deed. The deed to your home proves that the seller has relinquished ownership of the home to you. This is also known as transferring the title.
However, there can be scenarios where the seller didn’t have clear title to the home — which means that other parties have an ownership claim, and there are liens against the property. If this is the case, then the seller didn’t have the legal right to sell the home to you.
Getting a title search is key to avoiding this problem when you’re buying a home.
Key Takeaways:
- Title searches protect homebuyers by identifying any potential issues with a home’s title.
- Possible problems include encumbrances, easements, and issues with the muniments of title.
- The bundle of rights describes the legal privileges that come with owning a property, which can be restricted through encumbrances or liens.
Title Search Defined
A title search is a process where a title company researches public records to confirm who legally owns a home, what claims are on it, and who is permitted to sell the property.
The title search will ensure there are no liens — which are legal claims against a home — and that no one else could reasonably make a claim of ownership. It also can help identify errors in the property records, encumbrances, and other limitations on the title.
How Do Title Searches Protect Homebuyers?
Title searches protect homebuyers by helping them avoid ownership issues after they purchase a property.
For example, imagine that you buy a home from Person A. You close on the home, move in, and settle into your new place. A few months later, Person B shows up and says they own 50% of the home, and that Person A didn’t have the legal right to sell the property to you.
In this scenario, Person B can pursue legal action — a long and expensive process that could end with you losing your home. You also could lose money, face issues with your mortgage lender, and be liable for that lien.
A title search ensures that any home you buy has no title problems that could crop up in the future.
How Do Title Searches Work?
Knowing how title searches work can help you understand why they’re so essential when buying a home. This is important even if you’re buying a home with cash and there isn’t a lender to require one.
How much does a title search cost?
Title searches vary in cost depending on several factors — including the location and complexity of the property — but you can expect to pay between $75 and $250. You can ask a title company for an estimate before the title search is performed.
How long does a title search take?
Title searches are thorough and typically take 10 to 14 days, although expedited searches in some states can take only hours. The process is done online and includes “curing” title — which means resolving any issues with it.
Factors that affect how long a title search takes
Title searches can take a couple of weeks. How difficult it is to research the home and the complexity of the property will influence the timeline.
Some other factors that impact the title search timeline include:
- The age of the home. Older homes can have complex title histories with property documents that may be more difficult to find. This could make the title search take longer.
- The number of documents that need to be reviewed. The more documents that the title company must research, the longer the search will take.
- If the home has a clean or bad title. If a home has a clean title — meaning there are no liens on the property — then there are no issues to cure. If the title is bad, then the title searcher will have to investigate who rightfully owns the property, which takes time.
- The type of home. Different types of homes require different types of title searches. A home in an urban area with clear property lines may be easier to handle than one on a vast plot in a rural area where property lines are less obvious, and easements or other claims could be more difficult to identify.
What’s included in a title search?
The title searcher will produce a chain of title, containing a chronological list of the property’s ownership transfers. It typically will start with the original owner and end with the current property owner.
“A title search confirms that the seller has a legal right to sell the property and ensures that the buyer will become the rightful owner,” says Boyd Rudy, a Realtor and owner of MiReloTeam powered by Keller Williams Professionals, a real estate franchise company based in Plymouth, Michigan. “It verifies the chain of ownership and identifies any potential claims or disputes that could challenge the validity of the title.”
While generating a chain of title, the title searcher will identify situations where the title could be unclear. For example, if an owner of the home died, the searcher will investigate how the estate managed the home and whether any heirs could have a claim to the property.
When the title search is complete, you’ll get a document called a preliminary report that outlines the details of the property’s ownership and any liens or encumbrances.
Depending on your state, the report may have slightly different information. But generally, the preliminary report will include:
- Vesting title. This describes the way a person holds the title to their home.
- Description of property. This is the precise location and size of the property, often described using lot names.
- Muniments of title. These are documents that help the current owner prove title to a property, which includes wills, court judgments, and purchase and sale agreements.
- Encumbrances. An encumbrance is a claim against a property by someone who isn’t the owner, and can put legal restrictions on how a property is used. For example, a zoning law that limits a property to a specific use is a type of encumbrance. Liens, easements, and restrictive covenants are all types of encumbrances.
- Easements. Sometimes called a right of way, an easement is a nonowner’s legal right to enter or use a property. It doesn’t affect ownership. For example, there are utility easements, which give utility companies the right to access a property if it benefits the community as a whole — like trimming a tree when it interferes with a power line.
- Mortgages and assignments. This details any mortgages secured by the home and whether the original lender has assigned that loan to another bank.
- Tax information. This includes information on property taxes that the owner must pay and whether there are any delinquent taxes.
Who conducts the title search?
A title search is conducted by a title searcher who typically works for a title company.
“It is typically conducted by a title company or a real estate attorney during a real estate transaction,” Rudy says.
What can go wrong with a title search?
If the title search identifies an issue with the title — called a defect — it can affect the home sale. Buyers usually don’t want to buy a home without clear title, and lenders almost never approve mortgages on those types of homes.
Some defects that can come up during a title search include unrecorded liens against the property, undisclosed heirs to the home, forgery, a transaction involving a signing party who wasn’t mentally competent, or cases of mistaken identity.
Bundle of Rights
A house title refers to a bundle of rights that convey legal ownership of the property. Limitations on these rights can come in the form of encumbrances or liens.
Right of control
Right of control means you have control over how the property is used. If you have the right of control, you can make home improvements or renovate, landscape the backyard, and rent out the house.
Zoning laws could limit this right, such as by prohibiting a property to be used for business. Homeowners associations also can impose limitations, such as by banning certain lawn decorations or limiting your right to rent out the home.
Right of disposition
Right of disposition is your ability to dispose of the property as you wish. For example, this gives you the right to sell the home to someone else, give it away, or otherwise forfeit ownership.
Liens, such as mortgage liens, can limit this right. For example, if you have a mortgage, you can’t sell the home without paying back the loan.
Right of exclusion
Right of exclusion is your right to refuse access to your property. You’re free to tell people that they’re not allowed on your property or in your home.
An example of a limitation on this right would be a legal warrant that permits a law enforcement officer to enter your home and search it. Another example would be an encumbrance that allows utility workers to enter your property to conduct essential utility work.
Right of possession
Right of possession is the simplest of the bundle of rights. It’s your right to own the home.
Buying Title Insurance
Title insurance is an insurance policy that protects a homeowner or their mortgage lender from title problems. Insurers will conduct a title search before offering a policy. Mortgage lenders typically will require lenders title insurance as a condition of offering a home loan. You also can buy owners title insurance on your own.
Lenders title insurance is almost always required, but owners title insurance isn’t. Still, getting a policy is a good idea. Title insurance protects you from financial consequences, such as finding out the home you paid hundreds of thousands of dollars for doesn’t really belong to you.
Title insurance offers protection against defects in the title, coverage for legal expenses, and peace of mind, Rudy says.
If you receive a policy and someone comes along and says that they have a claim to the home, your insurer will help fund the legal case. If the issue is a lien, the insurer may pay the amount owed on your behalf.
This can happen if the previous owner failed to pay property taxes or if a contractor claims they did work on the home and were never paid. This also can happen if issues were missed during the title search.
Title Search FAQ
Here are answers to frequently asked questions about title searches.
There’s nothing stopping you from doing a title search on your own. However, given the complexity of conducting the search, and the potential penalties for missing a key detail, it’s usually best to hire a professional. If you’re planning on getting a mortgage, the lender may require that you hire a title searcher.
Deeds and titles are related but distinct concepts. A deed is a physical document that proves ownership of a home. A title to a home is a theoretical bundle of rights that you can exercise over a property. The deed proves that you have the title to a home.
A contingency in an offer to buy a home is a condition that must be met for you to move forward with the purchase. If the contingency isn’t met, you can back out and recoup any earnest money you paid.
A title contingency requires a home to have clear title before you can proceed with the purchase. Given the consequences of buying a home without clear title, it’s uncommon to waive the title contingency.
The Bottom Line on Title Searches
A title search is a key part of the homebuying process. It ensures that the home you’re spending a lot of time and money on is one you’ll have legal ownership of. Always be sure to conduct a title search if you’re thinking about buying a home, and work with a professional to ensure the search is thorough.
