Should You Really Care About the Title Search?

You’ve put in an offer on a New Orleans home and you’re ready to take a sigh of relieve. However, it’s not time to celebrate yet. There are several things that could still go wrong.

One of those things has to do with the title report. The title search is very important and something you should care about quite a bit.

What is a Title?

While you probably understand what a title is with a vehicle, it’s a bit different with a home. In real estate, the title refers to the person or persons with the right to use or dispose of the property.

When you buy a home, a title company will do a search to ensure the person selling the home is the legitimate owner of the property. If the title search comes back clean, they will issue a title insurance policy for the lender. This helps to ensure the lender is protected against any future claims on the property.

Title Issues Do Happen

About one-third of all transactions in the real estate industry come up with title issues. This may not be a big deal, but it could be a very big deal when you’re buying a home. Sometimes, the issues can be resolved, but not always.

Issues may cause the title company to look into public records, bankruptcy filings, wills, tax records, divorce proceedings and old deeds. If an issue is found, it could make it harder to buy the property.

Some of the title issues you may run into include:

•          No signature on the title
•          Unpaid property taxes
•          Liens
•          Fraud
•          Forgery
•          A previous owner’s heir had a claim to the property

If a title issue comes up, it will need to be handled before you can purchase the home.

Handling Title Issues

Once the title search has been completed, the title company will issue a Preliminary Title Report. This report will show information about the property ownership, any outstanding liens and other general information. This gives the seller the chance to find out about the possible issues with the property’s title and get them handled.

However, it’s important to note that the Preliminary Title Report may not list every lien or encumbrance affecting the property’s title. It will show the items the title company was able to find and show that the title insurance policy will not cover these items.

If you’ve put in an offer on a property with title issues, it’s not the end of the world. Often, these issues can be cleared up and the process can still move forwards. It could delay things a bit, however.

Often, contractors will put a lien on the property before starting work on a rehab or remodeling project. This is known as a mechanic’s lien and it’s used to ensure the contractor gets paid. While it should be released when the work is paid for, this doesn’t always happen.

Make sure you understand what is going on with the title of the home if you put in an offer. Your lender will likely require title insurance to be issued and for the title to be clean. This helps to protect you as well.