When you buy a piece of real estate, what you actually purchase is the title to the property. All of the money that exchanges hands helps ensure that you will be the official owner according to title records maintained by your local county recorder’s office.
As you can probably guess, the title for your home plays a major role in every pending real estate transaction. The title process is crucial to ensuring that you make a wise purchase. What does the title process involve?
A professional title search is necessary
When you first make an offer on a property, you and the seller operate under the assumption that the property has a clear title that they can transfer to you. You will have to purchase title insurance as the buyer, and you will have to pay for a lender’s policy as well if you finance the transaction.
Before a title company will underwrite a title policy, it will first have professionals perform a title search. They will look up the records for the property in question to determine if there are any possible issues that might arise. For example, there could be a lien from a company that replaced the roof and never got paid a few years ago or a home equity line of credit that someone paid off but never closed.
The title company will either move forward with underwriting the policy if the records are clear or initiate curative efforts if there are blemishes on the title record. Provided that updating county records or executing deeds can correct the issue, you will typically be able to move forward with the closing as planned and a pain title coverage once the company clears those issues.
Accurate title research is your first line of defense
Your home will be one of your biggest lifetime investments, and you shouldn’t have to worry about losing your down payment or your other investments in the property because someone else technically owns. A thorough title search will help ensure that the home you purchase will be legally yours and that it won’t be vulnerable to claims by outside parties.
Even if you come to the closing table with enough cash to purchase the property outright, purchasing your own title policy without a lender demanding it could potentially protect the biggest investment of your life.