How to Conduct Your Own Title Search
If you’re buying a house or a piece of property, you need to conduct a title search before completing the purchase transaction.
The title search is defined as the process of examining past tax records, deeds, and many other finance-related transactions related to a piece of property.
The reason why you need a title search is to make sure that the person you’re purchasing the property from is its actual owner, so that the property is transferred to you legally without any issues.
We’re here today to let you know that you can carry out your own title search. Here’s how it works.
Why do you need a clear title?
The reason why you need a title search goes beyond the ownership verification; you should be aware of any mortgages or liens on the estate, as well as the (paid and unpaid) taxes imposed on the property.
If you’re offering the owner of the property you’re intending to purchase a small amount of cash for their own property, the seller might neglects to mention the mortgage or lien on the property.
In case there’s any mortgage or lien on the property, they must be in the title’s chain, often as a separate document.
If you don’t find these documents in the title search you’re conducting, then it could be that the seller wants to annul them by paying off for the mortgage or lien and get them discharged.
Deed restrictions on the property
A deed restriction on a property can in fact limit what its owner can do with it. It often appears as a separate document in the title’s chain. That’s why it’s necessary to read what each deed states.
The majority of deed restrictions are considered as part of a Home Owners Association. Yet, there are many other reasons for that as well.
In case you fail to get this information on the title, these problems will become yours, and you’ll have to solve them by yourself.
Once you’ve spent time in the business of real estate, you’ll absolutely run into such issues. There’s often a quick solution for such issues, and sometimes there is not.
Is it necessary for you to purchase title insurance?
Most insurance agents, realtors, and bankers will convince you to believe that the ideal way to find out these issues is by paying hundreds, if not thousands, of dollars to research the property and issue a policy of title insurance.
In most cases, purchasing title insurance is a smart move. The policy of title insurance is mainly a guarantee from a title company that the title history of your subject property has been checked, and that it’s free of mortgages, liens, or any other issues.
That is, when the transaction is closed, you will be considered the property official owner. The title company in this case will make sure that there aren’t any other parties having an ownership claim to that property.
The good thing about resorting to a title company is that the majority of title companies are competent to review the title chain and find out any hidden issues.
It’s considered one of their duties to search for such documents and issues before it is too late (before you purchase a property that has no clear or complete title chain).
So, if you’ve never conducted your own title search or don’t have time to look for such a kind of documentation, resorting to a title company is often the best choice you hit.
In fact, title insurance provides you with the necessary protection along with saving your time and bringing you the peace of mind you long for.
That being said, when you’re purchasing a piece of land for $1,000, you will probably be entitled to pay another $450 for a title insurance policy!
The question now raises itself: should I pay almost as much for a title insurance policy as for the property itself?!
How can you prevent these costs from affecting your profit margin?
Your own title search – the cheaper way
There’s a way through which you can make this process cheap and fast; it will need more time on your part, though.
The best way to handle this is by getting an abstract of title from a local professional abstractor. These professional abstractors are found through a few ways. One of these ways is to do a Google search.
Type the country name, the state, the title search, and finally the abstractor. You’ll then decide whether if you’re able to find a professional abstractor.
You can also contact the Country Record’s office and get their recommendations on whom you can get a title search from because the majority of Record’s offices have connections and can therefore help you contact many abstractors at a reasonable price.
There’s another choice: you can contact your title insurance agency and request it to get you a title search concerning the property you’re going to purchase.
It’s worth mentioning that the majority of title companies charge more concerning the same work; that’s why this might not be the cheapest way to do so, but they are almost always helpful.
The price for the title abstract varies depending on who you contact. The cost ranges from $75 to $150 for the service. Yet, the price can get higher, depending on who’s handling the wok and what country it’s got from.
It usually takes the abstractor two days to get together a list of the property’s historical records. As soon as you get back the records, it will be a matter of reviewing every individual’s deed on record and most importantly making sure no mortgages or liens are hidden.
Once you get your title abstract, the documents will be chronologically set, from the recent to the oldest. The ownership record will look like this:
- Owner A sold the property to Owner B
- Owner B sold the property to Owner C
- Owner C sold the property to Owner D
For instance, if Adam Jacob sold his property to Angelina Smith in 1990, the next deed on record must show Angelina Smith as the seller.
On the other hand, if you notice that the next deed on record is Jane Jacob selling her property to Sarah Johnson in 1989, without mentioning when Angelina Smith sold the property to Jane Jacob, then this is a main issue.
This issue is called break in the title chain.
In this case, when the title company notices this in its research, it won’t be able to issue its own title insurance policy since there’s a clear flaw (gap) in the history of records.
If you face such a situation, it’s better to ask the seller if they still have these missing documents that can fill the gaps in his/her files.
In case they do, ask them to record these documents or you can record them yourself after obtaining them.
If they do not, you’re recommended to walk away from the deal because it’s better to solve these issues than to ignore them and eventually end up purchasing a property that has never been the seller’s own.
Checking the tax assessor’s records
You should collect as much data as you can about the seller of the property you’re going to purchase.
You should do this because you will need to locate the deeds (both the current and past) for the property you’re going to purchase.
The property tax records can be found at the tax assessor’s office, within the boundaries of the country/city where the property is situated.
As a side note, these records are available for the public to obtain; many places have these records online.
In order to get the accurate information on the property and its owner, you should have the following:
- The address of the street where the property is situated
- The ability to locate the tax assessor’s office
- The ability to check the website of the assessor’s office to determine whether you’ll be able to search online for tax-related information.
- In case you don’t have an option of online search, contact the assessor’s office, asking them to provide you with the steps you should follow to get the property needed tax information.
- The tax records of the property will offer you the parcel number, the lot number, the history of the (paid and unpaid) taxes, and finally the general description of the property.
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