Part of the home-buying process is a title search. What kind of problems can a title search reveal?

A title determines the legal owner of a property. If there is a problem with the title, there is a problem with ownership. Title problems can go unearthed for years, but if you plan on purchasing a home, the title must be “clear” in order to transfer ownership to your name. If a title isn’t clear, there may be delays or challenges to your ownership. A title search examines public records to determine who has rightful ownership, and if there are any challenges to that right. Some of the problems that can be revealed include:

Liens

A lien is a legal claim that a creditor can use to guarantee repayment on a debt. Outstanding liens must be paid off before the sale of the property can be completed. Common liens include unpaid mortgages or taxes, unpaid HOA dues or fines, or unpaid payments for work completed on a house. A title search can reveal these outstanding debts before closing so they don’t become your burden to pay off.

Encumbrances

An encumbrance is any restriction on the property that changes its overall value or the way the property is used. This may include easements, restrictive covenants or zoning restrictions. A title search can reveal these restrictions so your investment is not impacted by their existence.

Record Errors

A simple mistake, such as an error in the way the property’s legal description was recorded on the title, can cause problems down the road. If there is a recording error in the public record of the title, a title search can catch it so you aren’t on the hook for paying fees to correct it.

Fraud

If a previous owner forged a signature on the deed, it can cause problems with the validity of the title, and therefore the ability for it to be transferred to your name. Forgeries or other fraudulent activity can show up on a title search before they become your headache, or your financial burden to correct.