Making Better Real Estate Decisions

Part of the home-buying process involves having a title search done on the property. You don't want to buy property without having a title search done because there might be a lien on the property you would be responsible for after you buy the home. A title search is required if you'll need a mortgage to buy the house, and if you're paying cash, you'll still want a search done to protect your investment. Here's why a title search is so important.

A Search Makes Sure The Seller Has The Right To Sell

Some people may not be honest when it comes to selling their home. It's possible a person will put a house on the market and not reveal that there are siblings or a spouse with a rightful stake in the house. If you buy a house in this situation, you could lose it later if it turns out the seller didn't have full ownership and a right to sell you the house. One thing a title search company does is study public records for previous owners to make sure the current owner has the right to sell.

A Title Search Identifies Financial Burdens On The House

A real estate title search also involves looking through court records for liens and other financial obligations placed on the house. You want to know about these because if you buy a house with a lien, you're responsible for paying off the lien. Anyone can have a lien on a home, so it's important to always check for one. It could be due to medical bills, past taxes, missed HOA fees, or any number of unpaid bills.

If you're buying a home in foreclosure, it's good to assume the buyer had financial problems and that there could be liens on the house you'll need to settle. As long as you find out about the financial obligations that come with the house, you're in a position to decide if you want to continue with the sale.

A Search Is Needed For Title Insurance

When you close on your home, part of the paperwork involves buying title insurance. One part of the coverage is for the mortgage lender and the other part is for you. Insurance is necessary in case the title search service missed something and a problem comes up later. Since a title search company relies on public records and court documents, it's possible to miss important details if they aren't part of the public record.

For instance, there could be back taxes or HOA dues not filed with the court yet. Also, clerical mistakes in public records happen sometimes and could affect you later. It's also possible an unknown heir will show up and contest the sale of the house at some point. Title insurance protects you from these potential financial disasters. In order to get title insurance, you need to hire title search services, and then you can roll the cost of the insurance into the closing costs of the home.