Spring is a common time for house hunting; mortgage applications typically begin to increase at the beginning of February and grow steadily in the following months. When you’re in the market to buy a house, you keep hearing “title search” but first-time homebuyers may not feel entirely certain of what that means.
What is a Title Search?
A title search is a search of the public records to determine ownership of the property and to identify defects shown in the public records. In simple terms, the title lists any errors, judgments, restrictions, and other issues related to the property in the public records. Even if your home is new, the land involved still has a history to be researched. A title search will only reveal defects shown in the public records. Title insurance based on an attorney’s title search covers defects shown in the public records plus other defects that are not recorded in the public record, such as a forged deed. Normally, there is no need to conduct the title search until you have a contract to purchase the house. The standard Offer to Purchase requires the seller to deliver clear title and if the title search reveals defects then you do not have to close on the property.
Here are five such defects one might find when conducting a title search.
- Mistakes in public records — Sometimes errors happen during filing that could affect the home’s deed. Correcting these errors can be a financial burden and need to be done prior to closing.
- Liens — A lien occurs when banks place debts upon the property against the seller or previous owners, and when the owner has a judgment recorded or a lawsuit filed that may affect the title. When you purchase the home, the debts and judgments are against your property although you didn’t accrue them and need to be cleared up at or before closing.
- Heirs/Wills — When someone dies, the decedent’s interest in land is transferred by a probated will or if no will by the intestacy laws of NC. A title search determines who the actual owners are, which may be difficult.
- Encumbrances and Easements — This refers to a third party that has a lien or right to use your property. Easements may restrict you from using your land in the way you desire. If there are easements on your land then other parties will have the right to use it cross your property.
- Boundary/survey disputes — Some surveys may differ from the ones you are provided initially. This can lead to neighboring properties claiming ownership of the property you were promised. A title search will find prior boundary disputes on record but a current survey is required to be sure of your boundary limits and is recommended.