Performing a title search has been part of the real estate transaction process in the United States since the latter part of the 19th century. Prior to that time, the buyer of real property bore all the risk and responsibility to make certain that the title to the land received from the seller was valid and free of any defects or liens. A lien is a claim against the property usually involving money. If the title was later found to be invalid or fraudulent, the unfortunate purchaser lost their investment.
Prior to this time, buyers would have to rely on public officials to determine the soundness of a chain of ownership. If an error were made, buyers often could not recover the property purchased. Following a lawsuit on just this issue in Pennsylvania, in 1876, the first title insurance company came into existence.
These organizations would conduct research into public records to determine whether there were any defects or problems with the chain of ownership that could result in liability to a prospective buyer. After the records were checked, a policy would be issued to guarantee that the buyer was safe to complete the purchase; any errors discovered afterward would result in a payout on the policy.
What Is Involved In a Title Search?
There are a number of basic questions that a title search has to answer for a potential buyer:
-Does the seller actually have a saleable interest in the property; i.e. do they have the legal right to sell it?
-Are there any restrictions on the land? Things such as easements (the granting of access onto the land by a non-owner), restrictions on how the property can be used, and other agreements that would impact a buyer’s right to enjoy full use of the property.
-Are there liens on the property? These are monetary claims such as back taxes, assessments made by governmental entities, mortgages, or mechanic’s liens (claims made for work down on the land but not paid for).
In order to identify and verify that a deed can be issued free and clear of any problems, insurers will conduct a thorough examination of recorded documents maintained by the appropriate local government entity responsible for the 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 places.
What Information Can Be Discovered?
In addition to answering the basic questions, a title search can also reveal important information about the original price of the property. This can include how long the property was owned by the seller, the existence of any hazardous waste sites in the area, any financial problems the seller may have, survey records, and other documented information about the property.
A detailed investigation can also trace back the entire history of the land to the earliest recorded documents. The history of a piece of real estate can provide a great deal of insight that can help buyers make informed decisions secure in their knowledge that what is being purchased is exactly as it seems.