If you are purchasing a home, you must perform your due diligence between the time you go under contract and the time the contract closes. Due diligence covers a wide range of tasks to ensure that the property you are purchasing is right for you. To ensure you can afford the house, you will have to complete mortgage paperwork for your lender. To ensure the amount they are loaning you isn’t too high, you’ll have to get an appraisal. To be sure that the house is in good condition, you’ll have an inspection. And to make sure that ownership can legally transfer, you’ll need a title search.

Title searches can uncover issues or defects that may affect the ownership rights of a property. Some of the common issues that are uncovered during title searches include:

• Liens which are legal claims against the value of the property for unpaid debts. This may mean there are unpaid taxes, a mortgage on the home or judgments on the property. Mechanic liens can be placed by contractors to cover the cost of unpaid labor. If not addressed prior to closing, you could be on the hook for paying them off as the new owner.
• Encumbrances like easements, restrictions and covenants may restrict the way the property can be used or developed both now and in the future. This may be a deterrence to buying the home.
• Title errors or inconsistencies in the chain of a title can impact its marketability. A clear and unbroken chain of title establishes ownership rights, but discrepancies such as missing or incorrect deeds, improperly recorded documents and conflicting ownership claims can cast doubt on the validity of the title. Without being resolved prior to closing, this can lead to potential legal disputes and financial liabilities.
• Undisclosed legal issues such as boundary disputes or adverse possession claims. These hidden issues can pose significant risks to the buyer and may require legal action to resolve.
• Fraud or forgery in transfer of ownership documents. Instances of fraudulent conveyances or forged signatures can invalidate the title and cloud the buyer’s ownership rights, necessitating corrective action to rectify the situation and secure a clear title.

Title searches play a critical role in identifying potential issues and defects that may affect the ownership rights of a property. By conducting a thorough examination of the title, buyers can mitigate risks, protect their investment and ensure a smooth and successful real estate transaction.