Property Titles: a Vital Factor When Buying a Home

house front view

Buying property is a sizable investment and must be undertaken with diligence and care. Becoming the legal owner of a property that has liens or court judgments due will be a huge blow to your personal credit and financial portfolio. This is why a title search is always necessary before you seriously consider putting down an offer.

It is essential to have the right person for the right job. A personal injury lawyer is best suited to help you in case of a slip and fall, the same way that a real estate lawyer is the best person to advise you about property purchasing. Real estate lawyers have contacts who can get details about the title you may not have the experience to request.

What is the Title?

The title of the property is the legal document that clearly states the owner of the property and necessary details about it. This document has to change ownership for you to be able to take proper control of the property.

A title search is a necessary step that a lawyer conducts on your behalf to make sure that the title is free and can be transferred to you cleanly. If the title search reveals hidden costs in the forms of liens and loans that will become your responsibility upon purchase, then your lawyer may advise against buying that property.

If the lien is not too large, your lawyer should be able to negotiate a lower price for the property or have the sellers pay off the amounts before you take ownership. This is very necessary as otherwise the loans will be become payable by you and can affect your credit and ability to mortgage or sell the property.

person handing another person a pen

Should You Get Title Insurance?

There are two kinds of insurance policies that apply to property titles. Owners title insurance protects the buyer, and lenders title insurance, which protects the lender. This type of insurance is highly recommended in instances where you do not want to lose the property. If finding another building is not an option for you, you must cover yourself from this policy’s financial difficulties.

Owners title insurance matches the amount you pay for the property. It is an assurance that if the title search uncovers an issue, then the insurance company will provide legal assistance and pay valid claims. This will take the responsibility off your shoulders and ensure that you receive a clean title. This policy also stays valid for the duration of time you own the property.

Who Can lay Claim To a Title?

Laying claim to a title does not mean that someone does not want you to purchase the property. It means that the sellers may have omitted information or contracts linked directly to the property instead of themselves.

Title searches can cover a significant period of years, and a little over a third of searches uncover issues. This is not always linked to a lien or a court judgment. Sometimes the claims are due to a previous owner failing to pay taxes. Contractors who have not been paid for work can also lay claim to the title as the owner will become responsible for the payment.

The reason they cover so many years is that in some cases, there are undisclosed heirs to abandoned properties who can cause issues down the line.

Once everything is settled, and the purchase is final, you should receive your title within a week or so of the closing. Most people choose to store this important document in a safe deposit box at the bank.

The inimitable proof of your ownership and a document you need to provide in good condition if you ever decide to part with the property. It will also be necessary for your heirs to provide in the event of your death should you have willed the property to them.

Dealing with the title might feel like one more of the many tasks in buying a house, but it is very much one of the most important. If it feels too overwhelming, then leave it in your lawyer’s hands and focus on the tasks you can complete.

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