Housing

How To Do A Title Search For Property, With Photos

Caitlin Lamb Jefferson

Published: June 4, 2024 1:51 pm

If you’re considering purchasing an investment property, one of the first things you’ll need to do is run a title search. This important step can provide you with a more comprehensive picture of the property’s ownership and financial standing and allow you to make a more informed decision about whether or not the property is a good investment.

Running a title search on a property can be a little complicated. Investors — or anyone looking to run a title search on a property — have the option to go through a dedicated title search company or through a lawyer. If you need to find out more information about a property that you’re considering investing in, keep reading to learn everything you need to know about the title search process.

Why This Matters

A property title is a legal document that outlines who the owner of a property is. For investors, this information lets them know who the only individual or corporation is that has a legal right to sell the property. A title search will reveal any potential issues that could impact the sale of a property. This includes details such as whether the current homeowner has liens against the property that they will need to settle before it can be sold

A title search is usually included as a part of the closing process. However, it’s important for real estate investors to understand what a title search includes and the types of issues it could reveal. The results of a title search could have a big impact on your decision of whether or not to purchase an investment property, especially in an already competitive market.

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What is a Property Title Search?

Investors looking to purchase a property or buyers looking to purchase a residential property to live in should always run a property title search first. This search utilizes public records and other legal documents to determine the legal owner of a property. This process is complicated and time-consuming, and it’s important to make sure that nothing is missed. For this reason, a lawyer or property title search company should conduct the search.

The lawyer or title search company will source and analyze a variety of types of documents related to the ownership of a property. During this process, they’ll uncover any potential issues that could impact the sale of the property, including liens, unpaid fees, or easements located on the property.

Why is a Title Search Important?

There are a number of reasons why a property investor should conduct a title search on any property they are considering purchasing. When a lawyer or title search company conducts a search, they source a variety of legal documents to learn more information about a property. 

Some examples of documents they might use in their search include:

• County administration land records
• Divorce documents
• Bankruptcy documents
• Financial adjudications
• Custody and child support documents
• Estate planning documents
• Property deeds

There are several different legal issues that could be revealed as a result of a search, including some that could lead to complications with the property during or even after the purchase process. 

Let’s take a look at some information that could appear on a title search:

Liens and Loans

Some of the most common information to appear on a title search are loans and liens against the property. For instance, the current owner could have used a loan to purchase the property, which means that the name of the bank that provided the loan will also appear on the title search. Liens against the property may also appear on the title search. If the property is located in a community with an HOA and the current homeowner has failed to pay their dues, the HOA could impose a lien against the property. This lien will need to be settled before the property can change hands, which could complicate the process of purchasing the property.

Easements

Another piece of information that could appear on a title search is easements. Easements are legal arrangements that allow another individual who is not the homeowner to use a part of the property. One common type of easement is when a driveway for one property crosses over another property. Easements can make using a property a little more difficult, especially if you plan to build on that property. If you plan to rent the property or sell it again in the future, having an easement could be a red flag to renters or potential buyers.

Caveats

If other individuals have shown interest in purchasing a property, this could also appear in a title search. Knowing this information could help you decide how much to offer or allow you to make your case for why you are the ideal buyer.

Covenants

An easement isn’t the only type of legal restriction that could impact your ability to use or alter a property in the future. A covenant could limit what you are able to build on the property if you purchase it. For instance, it could restrict your ability to expand on a commercial property or add an additional home or other building on the property.

Finding out about these and other issues before you move forward with the process of purchasing a property is important. Debts like unpaid HOA fees, property taxes, or liens against the property could become expensive issues to deal with in the future. Running a title search could even reveal that someone besides the individual selling the property has a right to it, which could leave you in a complicated legal situation if you move forward with the purchase.

When Should You Run a Title Search?

Usually, a title search will be run during the closing process, which occurs after a buyer’s offer has been accepted but before the ownership of a home has been transferred. Your real estate agent or Realtor will let you know when a title search will be run. However, as a property investor, you could choose to pay a title search company to run a search prior to this step. If you suspect that ownership of the property could be in question or that the property may have undisclosed liens against it, paying for a title search early could save you time and money later on.

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How Do You Conduct a Title Search?

Running a title search can be complicated based on the status and ownership of the property. But there are five main steps that investors should know when running a search, including:

1. Examining the Chain of Title
2. Checking Property Taxes
3. Inspecting the Property
4. Uncovering Judgements
5. Closing the Deal

1. Examining the Chain of Title

The ownership history of a property is also referred to as a chain of title. This is one of the primary details that you’ll look for when running a property title search. The chain of title should include the current owner, as well as any previous owners going back to when the property was first built.

There are a number of ways to source the chain of title. Public records on ownership of properties may be available online or from the local recorder’s office.

2. Checking Property Taxes

Following the ownership history of a property, the next step in a title search is to research the property taxes. In this step, you’ll check that all property taxes have been paid. If taxes have not been paid, a lien may be placed on the property, which would allow the government to place the property for sale. If you purchase title insurance, you’ll be protected if this occurs.

3. Inspecting the Property

Once you’ve ensured that there are no unpaid property taxes, the next step is to schedule an inspection. Experienced real estate investors know that an inspection is essential for protecting yourself from anything unusual about the property that could land you in legal trouble.

4. Uncovering Judgements

The property itself is not the only thing that you’ll be examining during a title search. You’ll also want to check to make sure that the property’s current owners are not under any judgments. This could include things like unpaid HOA fees or other legal issues that could impact the property ownership. If you do uncover a judgment during the title search property, you’ll need to decide whether to work with the property owner to settle these judgments first or walk away from the property to avoid future legal issues.

5. Closing the Deal

After you’ve run a thorough check on the property records, it’s time to close the deal! Running a title search can allow you to make more informed decisions about your investment and ensure that you have the full picture of what you’re purchasing before moving forward with paperwork.

After a title search is complete, you can also choose to purchase insurance from the title company. This insurance can protect you if the search missed something important, such as an additional lien against the property.

How Much Does it Cost to Get a Title Search?

The price of a title search will vary depending on the source, the state where the property is located, how much information you are looking for, and whether it is a full report of ownership and encumbrances or a basic land report. Typically a title search costs anywhere from $150 to $1,000 and will be included in closing fees.

What If the Title Search Reveals a Problem?

In a perfect world, a title search would reveal no liens, complicated easements, or issues with the chain of ownership on a property. However, as a real estate investor, you’ll likely come across problems from time to time.

Some of the most common problems that a title search will reveal include:

• Outstanding loans against the property
• Easements placed on utility bills
• Unpaid contractor bills
• Owner gambling debts
• Liens from unpaid child support
• Unpaid property taxes

If these or other problems arise during a title search, investors have a few options. If you want to continue with the process of purchasing the property, the best option may be to try to work with the current owner to pay off their debts and clear the title. If they are motivated to sell and able to do so, they may pay off their current debts. If they are not, but you would still like to purchase the property, you could work out a deal wherein you’ll pay a portion of their debts.

Another option is to purchase title insurance. This way, if you continue with the purchase and an issue arises, you’ll be protected. The premium on title insurance is paid at the time of closing as a one-time purchase.

Can You Run a Title Search on Your Own?

As a property investor, you might wonder whether you can run your own title search to save on the price of paying a title company or lawyer to do so. You can run your own title search. However, doing so can be very time-consuming, and if you aren’t experienced at running searches, you risk missing important details.

Lawyers and title search companies are experienced in identifying which types of documents they need to analyze and which are legal. They also know exactly how to find these documents. This not only saves time but also ensures that every important detail about a property is revealed during their search.

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Frequently Asked Questions

Is a title search required?

While it is not a legal requirement when purchasing a home, running a title search is typically part of the closing process. As a buyer or investor, a title search is invaluable for helping you learn about any potential issues that could arise before or after closing the sale on a property.

Can you perform your own title search?

You can run a title search on your own. However, this is a job that is best left to the professionals. A lawyer specializing in title searches or a title search company will have the skills, tools, and knowledge to perform a comprehensive title search. Not only is the process time-consuming, but failing to find the necessary legal documents could cause you to miss an important and potentially costly issue.

Who pays for a title search?

The cost of a title search is typically included in the closing costs when purchasing a property. This means that the buyer pays for the cost of a title search. However, a buyer or investor can also choose to run a title search earlier in the home-buying process. In this case, the investor or buyer would pay for the title search directly, and the cost would not be included in the closing costs.

How much does it cost to run a title search?

The price for a title search varies depending on several factors. Who performs a title search, the state where the property is located, and whether it is a basic land report or a full ownership report are just a few details that will have an impact on the overall cost. Typically a title search could cost anywhere from $150 to upwards of $1,000.

Final Thoughts

Running a title search on a property can help reveal important details that could have a big impact if you choose to purchase the property. From liens to unpaid taxes, the issues that a title search can reveal may impact your decision to purchase a property or may cause you to change the terms of the purchase. While a title search is typically included as a part of the closing process, an investor may choose to run a title search earlier in the process if they suspect there could be an issue with the property. Although you could run a title search on your own, it’s a good idea to trust a professional title search company or lawyer to carry out the process. Whether you’re a new investor or have a large portfolio, understanding the importance of a title search and how it works can help you protect yourself from future legal or financial issues.