Top 3 Reasons To Do A Title Search For Your Clients
Property title searches are a vital part of purchasing land, commercial property, building or a residential home. Prior to every purchase a title search should be investigated to protect your clients and customers from financial loss or legal battles.
Title searches can provide extensive information about a property so that potential issues or concerns may be mitigated early in the purchasing process. The information can identify the value as well as the ownership. If there are concerns about what is identified in the title search, these can be reviewed in detail.
Attorneys as well as the real estate agent should provide support to the buyer or seller in these discussions. Financial institutions and mortgage lenders always require title searches and title insurance as part of the underwriting process, and a title search is required in acquiring title insurance. Following are three important reasons for conducting a title search for your client and customers.
Ownership of Property
A title search will verify the current owners and can identify the previous owners plus any additional outstanding ownership interests. There should be no surprises when it is time to negotiate with the current owners or their representative about price and other details regarding the property, whether it is land, buildings or a home.
Description of Property
Title searches will provide the legal description and property identifier number. It is important to find and verify the property's legal description to ensure the correct parcel or tract is being conveyed within the transaction.The legal description provides a detailed and exact description, often using coordinates, landmarks, or plats, which helps prevent disputes over property boundaries.
Outstanding Liens on Property
And a third reason for a title search is to discover any liens on the home, building or property. Knowing whether the property is free and clear or if the current owner's mortgage is outstanding can make a big difference in how the purchasing transaction is conducted. Entities such as lenders, financial institutions, contractors and tax collectors could possibly have a financial and legal claim against the property. As in the case of commercial property, your client must know if a lien follows future owners.
Elements of a Title Search
A title search uses public records to document information about a piece of real estate. When your client is considering purchasing a home, land or a commercial building, knowing the chain of ownership on that real estate is a vital piece of the process. Even with selling property, a title search can indicate if the person conducting the transaction for a transfer of ownership is authorized to do so. Once a title search is received, you should be involved on behalf of your client to ensure there are no legal or financial entanglements that would affect the sale. This is especially important if a financial institution is financing the deal. Any issues that are discovered must be addressed during the sales transactions, before any monetary considerations are negotiated. Any court judgments, tax obligations or debt attached to the property from previous owners needs to be handled so that your client doesn't become responsible forcomplications.
Easements
Title searches can identify any existing agreements or contracts that might limit the use of the property or have easements adjoining the property. An easement is real property that allows an entity to use the property owner's land for a specific purpose. The entity may place restrictions on how that easement can be used. Sometimes it can negatively affect the value of the property. A title search will indicate if the easement agreement is in writing or implied by law. There are a number of easement types. Some easements your client will have no control over, but at least you can advise them that they exist. Some types of easements include the following:
Utility easements are given to a utility company to install and maintain equipment.
Public easements allow the public at large to use private property for streets and sidewalks.
A Private easement example can be when a property owner gives a person or entity the right to use a private road to access other property.
Liens
Any encumbrances on a property can be revealed with a title search. Previously made or inherited financial and legal issues will be identified. Any of those obligations are the duty of the seller to solve so that the burden doesn't transfer to the buyer. The actual cost of the home or building could be the purchase price plus any additional costs that may already exist with the property. Even though fraud can occur, some title defects are mistakes unknowingly committed. For instance, some liens may continue to exist if the lienholder fails to report full payment through the appropriate courts or municipal offices. It is important for the financial institutions or lenders to know these are taken care of prior to loan approval. Another example is if the seller who inherited the property was unaware of a lien that was incurred a generation ago. There are dozens of legal processes that can attach liens to a property. Following are a few examples.
A Mechanic's lien can be filed by a contractor who is performing major construction on the home or building. It is placed against the property to protect them against loss of labor and material costs if a seller doesn't pay them. It is good to make sure once the construction costs are paid that the contractor has lifted the lien.
Tax liens can be imposed against structures who fail to pay property taxes. In that case, cities and other taxing entities like schools, fire, water and sewer districts should be paid by the seller prior to the transaction.
Homeowner fees exist when a property is governed by a homeowners association and there are unpaid dues or fees.
Spousal or child support liens can be filed by a court when a parent fails to pay court-ordered support.
Civil judgment pertains to claims for damages assessed in civil lawsuits.
Whether you are an attorney, real estate professional or financial institution representing a buyer or seller, title searches are imperative to give the negotiating process a chance to achieve outcomes that benefit both parties.
Hollerbach & Associates – We Know Texas Better™
Hollerbach & Associates provides the most accurate and in-depth title research. Our experts in property transaction services can assist you with obtaining title searches for your clients. We know the local laws and restrictions in all Texas counties and will provide accurate, reliable, and dependable services while exceeding our client's expectations.
Hollerbach & Associates has served Texas property owners since 1985. Our associates are experts in title research of all 254 Texas counties. Our professional and skilled staff have spent more than 30 years mastering Texas property and title research. Contact us for title research, abstracting & settlement services.