5 Reasons Why You Need a Title Search
Have you ever wondered why you need a title search before buying a home or why you buy title insurance? Your home may be new to you, but every property has a history. Title problems can turn a home that you bought for $250,000 into one that’s worth $1. A thorough title search can help uncover title defects tied to your property BEFORE you buy. And, subject to the terms of the policy, your title insurance provides protection for you from title problems that may become known after you close your transaction. Title problems are more common than you think. Some of these common title issues are:
1. Errors in public records: To err is human, but when it affects title to a property, those mistakes can be devastating. Clerical or filing errors could affect the deed or survey of your property and cause undo financial strain in order to resolve them. One of our clients almost lost the sale of her home because of a prior mortgage that was paid but never satisfied by a now-bankrupt mortgage company. She had to spend thousands to get the mortgage lien satisfied, almost losing the buyer of her home in the process.
2. Unknown liens: Prior owners of your property may not have been meticulous bookkeepers – or bill payers. And even though the former debt is not your own, banks or other financing companies can place liens on your property for unpaid debts even after you have closed on the sale. We found this issue for a client who retained us to assist with a home purchase. We found old tax bills that were unpaid – much to the surprise of the seller. Without a careful title search, these old tax liens would have become our client’s problem had she bought the home without having the old liens resolved at closing. Sadly for the seller, someone had missed the old tax debts when he was buying the home and they became his problem.
3. Illegal deeds: While the chain of title on your property may appear perfectly sound, it’s possible that a prior deed was made by an undocumented immigrant, a minor, a person of unsound mind, or one who is reported single but in actuality married. These instances may affect the enforceability of prior deeds, affecting prior (and possibly present) ownership. We’ve had to handle many closings where we’ve had to track down a former spouse to sign off on a deed – a very nettlesome call to make, indeed.
4. Missing heirs: When a person dies, the ownership of their home may fall to their heirs, or those named within their will. However, those heirs are sometimes missing or unknown at the time of death. Frequently we see homeowners pass away without a will and their children, living with them at the time of death, remain in the house for years without resolving the parents’ estate. These scenarios may affect you’re the heirs’ right to the property and ability to sell the property.
5. Undiscovered claims and easements: At the time of purchase, you may not know that a third party holds a claim to all or part of your property – due to a former mortgage or lien, or non-financial claims, like restrictions or covenants limiting the use of your property. An unknown easement may prohibit you from using it as you’d like, or could allow government agencies, businesses, or other parties to access all or portions of your property. Easements turn up frequently in title searches – and are often not disclosed to unwary buyers. Easements and encumbrances can have a huge impact on the value of property. We are currently two years, and many thousands of dollars, into litigation for one client over easements on his property.
Play it Safe
You would not buy a home without first having a home inspection, right? That’s obvious. It also makes sense to “inspect” the title. Title problems can be the most costly problems to fix – far more than a faulty furnace or hot water heater. When you buy a home, make sure that a title search has been done AND that your closing agent discusses the results with you. It’s your right AND you’re paying for it. Protect your investment with quality title insurance as well.
Welch, Gold, Siegel & Fiffik, P.C. provides a full range of services to residential and commercial buyers and sellers. Our real estate services group is lead by Michael E. Fiffik, Esquire (firstname.lastname@example.org). Reach them at 412.391.1014.