How To Reduce Risk With Accurate Title Searches
For lenders, accuracy in a title search is not just a formality, it's a safeguard for your investment. A flawed or incomplete title search introduces unnecessary financial and legal risk, potentially undermining the very foundation of your secured transaction. A title search company should be lender-focused, provide meticulous review and tailored searches to minimize exposure while supporting confident decision-making.
Incomplete Or Outdated Records Can Jeopardize Transactions
In today's fast-paced market, many databases used in title research are not updated in real time. This lag can result in title reports that omit recent liens, legal actions, or ownership changes. For lenders, funding a loan on a property with unresolved encumbrances or legal claims can significantly increase default exposure and impair the value of the collateral. A title research company should go beyond single-source data checks, leveraging multiple databases and cross-verification techniques to ensure you receive the most current, complete title information available.
Overlooked Prior Liens Or Judgments Create Hidden Exposure
Even when liens or judgments have been paid, they are not always properly released in public records. This oversight can create complications after closing, potentially placing your lien position at risk or delaying enforcement actions. Make sure your title research team doesn't stop at confirming payoff, but also verifies the formal recording of lien releases and satisfactions to ensure title is truly cleared. This added layer of diligence provides lenders with the security of knowing no unresolved obligations remain.
Generic Search Parameters Miss Deal-Specific Issues
Not all title searches are created equal. Many providers run standard searches that overlook nuances critical to lending institutions, such as Uniform Commercial Code (UCC) filings, mineral rights ownership, or historical chain-of-title issues. When these factors are missed, lenders may unknowingly approve financing with compromised or competing security interests. Title searches should be customized to the specific requirements of your transaction, ensuring critical issues are identified and addressed before they become liabilities.
Clerical Errors & Misfiled Documents Still Happen, And Matter
Clerical errors in public records, such as misspelled names, incorrect parcel numbers, or documents filed under the wrong index, are more common than many realize. Automated systems often fail to catch these discrepancies, resulting in misleading title reports. For lenders, this can mean delays at closing or even post-closing disputes. It is best to have a manual review of all search results, allowing the research team to identify and correct errors that automation alone may overlook.
Unrecorded Encumbrances May Not Appear In Public Records
Certain restrictions, such as easements, usage limitations, or rights-of-way, may exist outside of recorded land records. If left undiscovered, these unrecorded encumbrances can affect a property's value, restrict its use, or limit future resale potential. For lenders, this directly impacts collateral recoverability. The title research company should include in-depth investigation beyond public filings, often incorporating site reviews and consultations with local authorities or surveyors to uncover off-record factors that could affect your loan.
Relying Solely On Automated Title Searches Can Be Costly
While automation and AI tools can improve efficiency, they lack the human judgment necessary to identify complex issues or resolve discrepancies in public records. For lenders, relying solely on automated title searches can lead to incomplete or inaccurate information potentially resulting in flawed underwriting and costly post-closing disputes. Your title company should integrate technology with experienced professional oversight, ensuring every title search undergoes a thorough, human-led review before it reaches your desk.
Safeguard Your Lending Interests
Reliable title due diligence is foundational to risk management in lending. Make sure your title research company offers lender-specific title search services that are designed to provide clarity, accuracy, and confidence. Whether underwriting residential mortgages or structuring complex commercial deals, financial interests should be protected through every stage of the transaction.
Contact Hollerbach & Associates For Reliable Title Searches
Hollerbach & Associates has served Texas lenders, property owners and affiliates since 1985. Our associates are experts of abstracts and title research in all 254 Texas counties. Our professional associates have spent over 40 years mastering Texas property and title research and its coupled complexities. After all, We Know Texas Better™. Contact Hollerbach & Associates today and let our experts limit any financial risks with our reliable due diligence for your clients throughout Texas and beyond.