Real Estate Law
Protecting the Title to Your Property
Property is typically a big investment, and new property owners want to protect the money that they invest in their property. One of the fundamental things that property owners want to protect is their ownership rights. Accordingly, it is important to have a title search conducted on the property and to purchase title insurance in case anything was missed during the title search or an unrecorded document.
Property law is state-specific and can vary by city or county. The best way to protect your property is to talk to a real estate attorney in your area, who can give you specific legal advice for your situation.
A title search will give you a chain of title for the property, show any restrictions on the property, such as easements, and identify outstanding mortgages, back taxes, or outstanding liens on the property. A title search is done by searching the local land records in the town, city,or county where such records are kept for the property.
A title search can be impossible unless you have the training and know where to look and what to look for. This is why most people use a title search company or an attorney to do the title search for them. It is important that a title search be thorough and reveal all encumbrances, liens, and owners of the property so that a person buying the property knows:
- they are buying a piece of property that can be legally sold to them; and
- if there are any restrictions or encumbrances that they will become subject to or liable for when they become the property owner.
For these reasons, prospective property buyers should have a full title search done. A limited title search, also known as a “bring down search,” may be done if property owners are not changing such as during refinancing or taking a second mortgage on the property
While a thorough title search will reveal potential problems and give a buyer or seller the opportunity to rectify them, it is always possible that the person conducting the title search missed something. Since the government only provides a method for checking property ownership and encumbrances and does not verify such ownership or encumbrances, it is important to protect your investment with title insurance.
Title insurance protects property owners from incurring financial losses because of a problem with the property’s title. Title insurance companies require policy owners to have a title search done before obtaining insurance. Most banks require mortgage applicants to obtain title insurance prior to issuing a mortgage so that they can be assured that their interest in the property will be honored if a previous lien, owner, or other encumbrance should come to light in the future.
Title insurance policies may be issued as an owner’s policy if it is purchased by the homeowner or a lender’s policy if it is held by the mortgage lender. A lender’s policy only provides coverage up to the loan amount. An owner’s policy will cover any increase in value while the owners hold title to the property. Typically, the cost of title insurance is a one-time fee and the insurance remains in effect as long as the same owner maintains ownership of the property. A subsequent owner would need to purchase his or her own title insurance policy as they are nontransferable.
Most United States jurisdictions maintain public, yet complicated, systems of land records. Homebuyers should conduct title searches, or hire someone to conduct a search, and purchase title insurance in order to make sure that their property title is protected.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified real estate lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local real estate attorney to discuss your specific legal situation.
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