A title search is a comprehensive review of all public records involving the title to a particular property. A typical title search consists of any and all historical records pertaining to the property including, but not limited to; deeds, wills, trusts, court records, property and name indexes, mortgages, and many other documents.
What is the purpose of a title search?
The purpose of the title search is to verify that there are no liens or other claims against the property and that all former owners have given up their rights to the property. This verifies that the seller has a right to transfer ownership of the property.
How is a title search conducted?
A typical title search can go as far back as 30 years. A search begins when the examiner, a lawyer or an expert from your title company, investigates the previous owners of the property going all the back to when the land was purchased from the government by the original home owners.
With the miracle of modern technology, examiners have been able to utilize the power of the Internet in order to expedite and perfect title searches, giving unlimited access to public documents at the click of a button.
The examiner is looking for "clouds," a title term for any problem that might affect the seller’s ability to successfully transfer the title of the home to the buyer. If "clouds" are detected, it’s crucial that you have title insurance to safeguard your investment.
What role does title insurance play?
Title insurance is essential because it protects the homeowner of their ownership. Title insurance safeguards the homeowner from loss due to problems with the title. Your policy states that your title company will provide legal counsel should any problem with your title occur. The title insurance company offers a complete and thorough background investigation on your property searching for anything that could affect the title, such as: tax information, historic matters of importance, purchasing information, other claims to the property, etc. — essentially all matters which could affect ownership.
However, even in the most thorough investigations, it is possible to miss something important, and therefore, you buy title insurance. This protects the homeowner as well as the title company. Once the settlement is final, the homeowner is completely responsible for any valid claims made against the property in question. Title insurance protects your investment.
If "clouds" do arise, title insurance protects the buyer and lender from any losses, including the cost to fix the errors, up to the value of the policy or the original purchase price. This is due to the fact that the title search failed to turn up this information.
Are their hidden problems that a title search may not expose?
In some cases, even the most thorough title search can miss something that could affect the ownership of your home. Hidden problems could include fraud, forgery, faulty deeds, mental incompetence, clerical errors, etc. In these cases, your title insurance will protect you from any loss you incur up to the amount of your policy, as well as your legal fees.