It can seem like there are ten thousand steps to the closing process — let’s be honest, it is a lot. Inspections, final loan approval, and other contingencies. A title search is included in this list and unfortunately, title problems can account for almost 10% of closing delays. Eeeks!
So, what is a title search and why does it matter?
Most importantly, a title search identifies who owns the property. This seems like a no-brainer, but surprisingly, the party selling the home may not have the legal right to do so, at least on paper. This may occur in cases where the property is only in one spouse’s name or a property is held in trust or probate. Taking a stab at that ever so pesky paperwork, will reveal if correcting these issues might cause a delay.
Additionally, a title search also uncovers any existing liens on the property. This would include any current mortgages and may find old debt or unreleased loans. Items which must be paid off or removed prior to sale. Finally, a title search will list any deed restrictions, such as easements or property restrictions.
If the title search does find any issues (hello, delays), the seller will need to remove them before the closing can occur. Once the sale is closed (YAY), title insurance ensures the new owner against any title issues that were not discovered during the search (safety first!).
Unexpected delays can be a bummer and no one wants to experience them. A seller can help mitigate title issues by running a preliminary title search at the time of listing. This gives them plenty of time to address any outstanding title issues before it costs buyer and seller valuable time in delays.