Title 101

A title search or title review is the process in which the legalities around a property are examined to make sure the seller has complete ownership of a property and the right to sell it, the legal description is compared against the property for sale, and any other entities who may have legal and continuing access to the property are identified. 

Here are just a few things that are examined during the “title review” process

Verify Seller has the Right to Sell the Property

Oftentimes there are other entities who may be listed as legal owners. These could include divorced spouses, heirs, or trusts. These people need to be cleared before the property can change hands.

Identify Any Lienholders

Sometimes creditors put “liens” on properties to make sure debts are paid before the property can change hands. These can include creditors for property tax, some utilities, contractors, and even the IRS. In some cases, these debts can be paid out of closing dollars, but often they need to be taken care of by the seller before closing.

Identify Easements which Provide Ongoing Access.

The buyer needs to be informed of any existing easements and ongoing access that goes along with the property. For example, the gas company may have the right to maintain underground gas pipes on your property, or a neighbor may have the right to use a shared driveway. An easement may include the requirement to keep an area free of fences and outbuildings to ensure access. The title review uncovers any such easements. 

Legal description

As a buyer you want to make sure that you are purchasing the right property! 

Title insurance is also provided by the title company and protects the buyer and the lender (if applicable) against any defects in the title. For example, if the buyer was not made aware through the title report that a 20-square-foot section of the property needs to be kept clear for power company access, rendering that portion of the property useless for development, title insurance would, depending on the circumstances, provide relief to the buyer for that loss of use. 

You will be provided a copy of your title report after the purchase and sale agreement has been accepted by both parties and before the property changes hands.