In Texas real estate transactions, understanding and addressing liens and encumbrances is critical for attorneys and loan officers who aim to protect their clients' interests and ensure smooth closings. Unlike many other states, Texas has distinctive property laws, lien priorities and recording practices that can complicate title searches and risk exposure to hidden claims. This article explores the common complexities of liens and encumbrances in Texas and provides actionable guidance tailored specifically to the legal and lending professionals operating in this unique market.
What is Title Research?
Property title searches are typically conducted when real estate is being purchased, sold or leased. It is crucial to understand the chain of ownership on property before any real estate transaction is made. Comprehensive research will uncover information about current and previous owners and if the property can legally be sold or leased. Discovery of any liens, pending lawsuits, unpaid taxes, leases, easements, mortgages or other outstanding issues or restrictions could impact the transfer of ownership. This includes reviewing deeds, divorce cases, county land records, bankruptcy records, probate records and other financial judgments potentially attached to the property. A clear property title search confirms there are no outstanding issues that could crop up after ownership has been transferred.
A traditional title commitment and abstract services are both essential elements in real estate transactions, but they serve different purposes and offer distinct types of information. A title commitment is a formal document provided by a title insurance company that outlines the conditions under which a title insurer will issue a title insurance policy. It includes a legal description of the property, current ownership, and any recorded liens or encumbrances. In contrast, abstract services involve compiling a comprehensive history of the property's title through a detailed examination of public records. While a title commitment offers a forward-looking perspective, focusing on clearing title defects before closing, an abstract service provides a historical review of ownership and encumbrances. Understanding these differences is crucial for buyers and lenders to ensure a smooth and secure transaction.
The topic of mineral rights in Texas is a complex subject with standards and regulations varying from county to county. Mineral rights do not always belong to the actual land property owners. That is very important information which is critical when a client is considering buying or selling a piece of property. Usually mineral rights refer to the deposits of minerals that are static under the ground such as coal, metal ores, stones, sands or salts. Then there are the fluid minerals such as oil and natural gas. Property owners that have mineral rights may sell, lease or donate the rights to individuals or companies. Any mineral interests can be owned by governments, property owners or corporations.
The purchase of a piece of property is an extensive process that involves a multitude of professionals, property inspections, a survey, appraisal, and often a title abstract. This comprehensive, detailed report is usually performed by the title company, and is one of the many documents required to close the sale of a property and transfer title to the new owner. The title abstract is undeniably the authority on information about a property's title.
If you've ever purchased a property, you know how frustrating those last-minute delays can be when your closing date is fast approaching. Often, delays are unavoidable, but there are many times where these delays could have been prevented. According to the National Association of Realtors, 9% of all closing delays are related to issues associated with the title of the property. For this reason, it is a good idea to perform a title search on the property to avoid delays in your closing.