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The importance of a title search when buying property

On Behalf of | May 18, 2020 | Firm News

When buying property, a title search could uncover details that may require attention to prevent a setback. A last-minute issue discovered during a title search, such as the current seller not having 100% legal ownership of the property, can delay the closing. 

When transferring property, a buyer must ensure that a title is clear and remains free of issues that could affect a new owner. A title search generally discloses a property’s history for the past 50 years or so. As reported by Bankrate, an investigation could expose serious disputes concerning undisclosed heirs or possible fraud. 

Public records revealed 

A title search reveals public disputes filed against a property and includes liens or judgments. If a house has a mechanic’s lien attached for unpaid repairs or improvements, the closing may not proceed until the seller pays the contractor. 

Sellers must resolve any outstanding financial obligations before the closing transaction can take place. Failing to clear a title may result in a potential legal dispute with the new buyer named as a party to a lawsuit, although title insurance may help reduce a new owner’s risk of liability. Buying property without understanding its potential legal issues, however, could result in serious problems in the future. 

Disclosure of restrictions 

If a former owner placed restrictions on the use of a property, a title search may describe how a new owner can use it under those conditions. Restrictions typically remain with the property and pass on to the buyer unless legally removed. A restriction that became part of the title may have come from a former owner who, for example, prohibited certain types of businesses from using the property. 

A potential buyer has a right to know what he or she can do with a property before making a purchase. The results of a title search can shed light on this important issue. If a buyer wishes to remove a usage restriction, a transaction may require negotiation to ensure he or she can use the property as hoped for.