If you have ever bought a home or even considered buying a home, you have probably heard of title searches and title insurance. You may not, however, be aware of why title searches are conducted and why title insurance even exists. Title refers to your ownership rights in the property. That is why problems with a title, which do come up on occasion, can affect your ownership rights. Title insurance works to financially protect you should the property you took title to have a defect that affects your ownership rights.
What Type of Property Defects Can Be Revealed in a Title Search?
A title search is conducted in the property purchase process to help ensure the buyer will receive a clear title. A clear title means that there are no problems with the property history that would have a negative impact on your ownership interest. First and foremost, a title search will let the buyer know that the seller actually has the legal right to sell the property. Furthermore, it will inform the buyer if there are any outstanding judgments or liens in place against the property.
There are several defects that can be uncovered during a title search, including:
- Property liens: Prior owners of the property may have failed to pay bills that could have resulted on liens being placed on the property. They could have failed to make payments to a homeowners’ association, a bank, or another type of financial institution. The unpaid debts of the former property owners are not your own, but, if a lien was placed on your property as a result of an unpaid debt of a previous owner, it may still affect your property title.
- Easements: A title search should reveal easements on the property that could prevent you from using the property in certain ways. An easement could also be on the property which allows government agencies, businesses, or others to access your property in whole or in part.
- Boundary disputes: For any number of reasons, the boundaries of your home may not be accurately reflected at the time you go to purchase it. Sometimes there are conflicting survey reports that could lead to problems such as neighbors disputing your ownership regarding a portion of the property.
A title search should reveal issues or potential issues with these types of things. If there are any unpaid mortgages, judgments, or taxes relating to the property, a title search should bring them to light. Title insurance would help to protect you financially if these problems, or other problems, were not necessarily revealed at the time of the title search, but came up later on.
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