Of all the things that have been deemed important to real estate home buyers and investors over the course of a transaction, none may carry more weight than the title report. At the very least, the title report is specifically designed to disclose a property’s most important information: everything from the rightful owner and vesting interests in the property to the details of liens, encroachments, or easements and property boundaries. It is safe to say the information contained in a property’s title report is not only important to familiarize yourself with, but also necessary.

Title reports are, after all, the best and most efficient way to ensure a property is free of defects — legally, defects refer to “anything attached to the land, such as another person’s rights, that could affect how you use the land or decrease its value,” according to Rocket Lawyer. The last thing you need to worry about buying a home is whether or not you are the rightful owner. That said, do yourself a favor and get a title report before you close on a deal; it could be the smartest decision you make.

What Is A Title Report?

A title report is a document that outlines the legal status of a property and related information on its ownership. There are several key components that must be included in a title report. This includes information on the county, zoning laws, property value, and current tax information. Title reports will also feature a full, legal description of the property. In many cases a sample title report will include paperwork on the chain of ownership, unreleased or open mortgages, judgement dockets against prior or current owners, and supplemental information within the scope of search.

While visiting your courthouse and Assessor can net you some great information, these methods are only reserved for professionals. For those of you that are, well, less versed in conducting title searches, I recommend working with a professional.

If you don’t know how to get a title report for a property you are interested in buying, I highly recommend hiring a title officer. As the name would lead you to believe, a title officer is someone that has been professionally trained to identify the defects of a home — again, defects are those discrepancies that could call a home’s true owner into question. Otherwise known as a title agent, title officers are responsible for confirming whether or not a piece of real estate is, in fact, legitimate and that there are no issues with its title. In doing so, title agents will investigate the status of a property over the course of an impending real estate transaction, ensuring the buyer of exactly what they are dealing with. That way, buyers can commit without the threat of ownership issues appearing in the future.

Real Estate Title Report FAQ

Dealing with courthouse records, deeds and title officers may not be what you had in mind when purchasing a property, but it is a crucial step in the process. Rather than being overwhelmed, take time to prepare yourself for a title search by learning how it works. Even if you have experience with title reports, it is still a good idea to brush up on the process. Read through the following frequently asked questions below and make sure you’re prepared for the next property you intend to buy.

• How do you order a title report?

• How do I run a title search?

• How long does title work take?

• What does a title search cost?

• What’s the most important part of a title report?

• What is title insurance?

• Clear vs Marketable Title

• How do you find a good title company?

• What are common problems when buying a house?

How To Order A Title Report?

To order a title report, buyers can simply enlist the services of a title company. There are plenty of reputable title companies ready and willing to perform a title search on any particular property. Simply search “title company” online or ask a realtor for a recommendation. Either way, it should be relatively simple to find a trustworthy company willing to investigate the title of a property in question.

If you would rather not hire a company and, instead, do the title search yourself, simply take a trip to your County Assessor’s office or courthouse. At these locations you can find a great deal of information on the property. In some cases, the records provided by a courthouse may not be complete. As I already alluded to, performing you own title search can carry massive implications. I recommend leaving this particular task up to a professional.

How Do I Run A Title Search?

Again, the easiest and safest way to run a proper title search is to enlist the services of a title company. The title company will assign a title officer to anyone that inquires about a property, and it’s their job to investigate the status of a home. In other words, title officers will do all the work for you if you hire them. What’s more, working with a title officer will also award you the opportunity to acquire title insurance.

How Long Does Title Work Take?

Title work typically takes around two weeks, though it can vary. The amount of time it takes to gather information to put together a title report is entirely dependent on the person gathering the information. 

How Much Does Title Work Cost?

Title work will typically cost around $100. The cost of a title search isn’t all that expensive, especially when you consider the cost of everything else over the course of a real estate transaction. It is worth noting, however, that the title search typically comes with title insurance. As its name suggests, title insurance will insure the results of the title search. “If any claim is brought against the property as a result of a pre-existing problem with the title, title insurance can cover the expense,” according to Financial Web. Not surprisingly, title insurance will come at an additional cost. According to the Federal Reserve, “a lender’s policy on a $100,000 loan can range from $175 in one state to $900 in another.”

What Is The Most Important Part Of A Title Report?

There are 3 crucial sections that must be reviewed thoroughly in the preliminary title report. They include the legal description, property taxes, and mortgage liens. The legal description will mention where the property is located, how it is zoned, and what the boundaries of the lot are in relation to nearby streets. This section should be specific and accurate; review it with your real estate agent if you have any questions.

The property tax information will establish whether or not there are any taxes owed on the house. In order to ensure the sale of the property, any taxes must be settled. In other words: you cannot purchase a home with outstanding taxes. Following this information, a title report will outline mortgage liens. These will be listed in descending order, with the largest lien holder at the top of the list. There will be other information included in a title report, but reviewing these three sections is a good way to start.

What Is Title Insurance?

Title insurance protects the owner (or lenders) against any problems that may arise over the legal ownership of the property. Title insurance can be broken into two main types, the owner’s insurance and lender’s insurance. Owner’s insurance will protect you (the buyer) from any ownership disputes, while lender’s insurance will protect the bank that financed the home. For example, if you purchase a property and someone else turned out to be the rightful owner title insurance would pay back the value of the home.

While title disputes may not be particularly common, it is always a good idea to protect yourself from any potential issues. If you work with a title officer on finding a property, it will typically be offered at the time of the preliminary report. When purchasing a property or other large asset, it is always a good idea to make sure you are protected in the event any issues arise.

Clear vs. Marketable Titles

A clear title has no issues, such as easements. A marketable title, however, may have easements or other issues that are not considered conflicts of ownership. By default, your contract may only give you the right to receive a marketable title; you may be obligated to purchase a home where you’re forced to give land access to a neighbor, or where you’re not permitted to build in a way that obstructs your neighbor’s view. Before you make your offer, discuss your title review with your agent — find out whether your title will be clear or good and marketable. 

How Do You Choose A Title Company? 

To choose a title company you can either ask around your network or search online for options in your market area. Look for a company that has been around for a long time. You want to make sure they have experience and know if you have a problem down the road that they will likely still be in business. Once you have a few options in mind be sure to look for customer feedback online. A title report is crucial to the sale of a house, so make sure you find someone you can trust to get the job done right. While it may be tempting to work with the first company you see, mind your due diligence and search for options. Feel free to reach out if you have any questions for a potential title officer, after all they are there to help.

What Are Common Property Title Problems When Buying A House?

A number of issues have the potential to show up on a title report, but some of the most common are those outlined below:

• Liens: A lien is a legal claim of ownership listed on the title of a home. It is worth noting that anyone owed money by a homeowner can file a lien on a home. This includes utility companies, contractors and tax departments.

• Easements: Easements represent another person’s right to use the land for a specific purpose. While not as common as liens, and in some cases not as threatening to the sale of a property, buyers should still be aware of easements.

• Encroachments: As the term suggests, encroachments identify pieces of property that encroach on other people’s land. That means the property you are looking to buy might overlap with another person’s land, or vice versa. Either way, a title report will bring these issues to light.

• Covenants, Conditions, & Restrictions: If the property is located under the jurisdiction of a homeowner’s association there will be certain bylaws the property is subject to. Potential buyers should be made aware of these early in the buying process.

• Historic Oversights & Requirements: Properties located within historic or protected districts will have certain restrictions about the upkeep of the home. Home buyers will typically be aware when buying a property located within a historic area; however, these rules will still show up on a title report just in case. Potential buyers should consider these carefully, as they are typically set and regulated by a local committee.

Summary

Whether you are a first-time homebuyer or a seasoned investor, it is crucial to know what you are getting into when purchasing a property. That’s exactly what makes a title report so important: it outlines everything you need to know about owning the property. Always mind your due diligence during the closing process and request a title report. Further, read through the above questions to make sure you know what you are looking for when you get one. By taking the extra step to learn how a title report works you can help avoid potential problems down the road.

                                                                                                                                              BY Than MeRrill