Title Searches: What You Need to Know
Before you can get title insurance, you'll need to get a title search-- an examination of the history of the property in question and any legal claims that could affect it's ownership. Without a title search, your title insurer won't know whether there are any liens, easements, or other title issues that might affect that property's value.
Common Issues Uncovered by Title Searches
Some of the most common issues that a title search looks into include:
Title Marketability: Checking to ensure that the seller actually has a marketable title (and is who they say they are) is key, since some people are known to impersonate sellers by falsifying documents. In other cases, another person could have a claim on the property, i.e. an ex-spouse who shared ownership with a previous owner, or previous owner's heir in a will that wasn't properly registered.
Land Use Restrictions: Typical land use restrictions include easements, which permit parties other than the owner to use the property in a specific way, and covenants, which may limit how the land is used.
Financial Liens: A financial lien is a claim on a property due to a debt. In the case of non-payment, a lien-holder can potentially foreclose on the property in order to repay the debt. Liens can come from banks, tax issuing authorities (local, state, and federal governments), and unpaid contractors (mechanic's liens).
Even With a Title Search, Title Insurance is Still Needed
Many might think that a title search is all you need to make sure your property's title is free and clear-- but that's simply not the case. Unfortunately, title issues can pop up at any time-- and unless you have a good owner's title insurance policy, you simply won't be protected. Remember, owner's title insurance doesn't just protect you for the price you paid for the property, it will also pay your legal fees to defend your property rights in court. That way, you can be sure that no matter what happens, your investment will be securely protected.