Conducting a title search has been a part of the real estate transaction process in the United States since the latter part of the 19th century. Prior to that time, the real estate buyer assumed all risk and responsibility for ensuring that the title to the land received from the seller was valid and free from defects or encumbrances. A lien is a claim against property that usually involves money. If the title was later determined to be invalid or fraudulent, the unlucky buyer lost his or her investment.
Before this time, buyers would have to rely on public officials to determine the strength of a chain of ownership. If a mistake was made, buyers were often unable to get back the purchased property. After a lawsuit on this issue in Pennsylvania, in 1876, the first title insurance company was born.
These organizations would conduct investigations of public records to determine if there were any defects or problems with the chain of ownership that could result in liability for a potential buyer. After checking the records, a policy would be issued to ensure the buyer was safe to complete the purchase; any errors discovered later would result in a policy payout.
What is involved in a title search?
There are a number of basic questions that a title search must answer for a potential buyer:
– Does the seller actually have a salable interest in the property? i.e. do they have the legal right to sell it?
-Are there any restrictions on land? Things like easements (the granting of access to land by a non-owner), restrictions on how the property can be used, and other agreements that would affect the buyer’s right to enjoy full use of the property.
-Are there links on the property? These are monetary claims such as back taxes, appraisals made by government entities, mortgages, or mechanical liens (claims made for unpaid land work).
In order to identify and verify that a deed can be issued without any issue, insurers will conduct a thorough examination of the registered documents maintained by the appropriate local government entity responsible for maintenance and record keeping of all real estate related information. Examples of these locations would be a Recorder of Deeds office, County Recorder’s Office, or similar locations.
What information can be discovered?
In addition to answering basic questions, a title search can also reveal important information about the original price of the property. This may include how long the property was owned by the seller, the existence of hazardous waste sites in the area, any financial problems the seller may have, survey records, and other documented information about the property.
Detailed research can also trace the entire history of the earth back to the earliest recorded documents. The history of a real estate property can provide a wealth of information that can help buyers make informed decisions with the certainty that what is being purchased is exactly what it appears to be.
