A title search involves reviewing public records to verify the legal owner of a property and their right to sell it. If there is a lien or judgement against the property, a title search will uncover it so a buyer doesn’t unknowingly become financially responsible once the sale closes.
If you’re interested in buying a home, a title search will be a key part of the process. Learn more about how a title search works, how to get one, and everything else you need to know to ensure you’re protected when purchasing property.
Definition and Examples of Title Search
A title search is usually performed by a title company or attorney on behalf of a buyer, according to Lukasz Kukwa, a real estate advisor with Coldwell Banker Realty in Westfield, N.J. It involves digging through public records such as court documents and deeds to verify that the current owner of a property is, in fact, the legal owner and has the right to sell it.
“A title search also ensures there are no claims or liens on the property that need to be addressed before the sale,” Kukwa said. That can include unpaid property taxes, association fees, bills for home improvement projects, and other types of credit or loan defaults that could become the buyer's responsibility if they are not identified prior to the sale.
How Does a Title Search Work?
If you need a mortgage to finance a home purchase, the lender will almost certainly require a title search. However, even if you’re paying cash, it’s a good idea to have a search done. “It could be a good way to protect yourself from loss or taking over someone else's financial burden,” Kukwa said.
The person or company performing the search will put all of their findings together in a report known as an "abstract of title." Kukwa said this can include information such as current and previous owners; past surveys of the property; easements; deed transfers; mortgage assignments and releases; any relevant wills or lawsuits that involve the property; and more.
Types of Title Searches
There are two main types of title searches.
Full Coverage Search
This is a comprehensive search that’s used whenever a property is being sold. The title company will look back at decades’ worth of ownership history and search for liens, bankruptcies, and other judgment proceedings against the current owner as well as other parties on the title.
More common for refinancing, a limited title search generally only looks at records related to the current owner and deed.
Do I Need a Title Search?
Even if you feel confident that you can buy a property free and clear, a title search will most likely be required if you’re financing the purchase. Plus, considering the small upfront cost of having a title search performed, it’s worth avoiding a potentially expensive lawsuit or losing your home altogether if a problem arises in the future.
A title search is relatively inexpensive (compared to the cost of a home). Expect to pay anywhere between $150-$350 or more, depending on the depth of the search.
Title Search vs. Title Insurance
In addition to performing a title search, it’s also important to purchase title insurance. Title insurance protects you in the event an outstanding judgement or lien against the home wasn’t uncovered by the title search. For example, if the previous owner owes back property taxes or has an outstanding bill for home repairs, title insurance ensures you can’t be sued for the money owed once the title is transferred to your name.
There are two types of title insurance. One is lender’s title insurance, which is required when you finance the purchase of a property and protects the lender against claims until you’ve paid off the mortgage. The other is owner’s title insurance, which is optional and protects you against future claims as long as you own the property.
|Title Search||Title Insurance|
|Can be performed by an individual or title search company||Policies are provided by title insurance companies|
|Is required by mortgage lenders||Lenders title insurance is required for most mortgages, but buyers can also secure their own separate policies|
|Alerts prospective buyers to potential issues related to the legal ownership or claims against a property||Protects the buyer from financial loss in the event issues weren’t caught during the title search|
Protects the buyer against future lawsuits
Helps a buyer qualify for financing
The search isn't foolproof
May not uncover every issues
Protects the buyer against future lawsuits: It’s likely the home you’re considering has changed hands many times, especially if it’s an older property. A thorough search of the title will ensure you don’t inherit any outstanding liens or encumbrances if you buy it.
Helps a buyer qualify for financing: If you need a mortgage to buy a property, the lender will most likely require a title search as part of the mortgage underwriting process.
The search isn’t foolproof: Even when you hire a professional title search company, the search is performed by a human, which leaves room for error and the possibility that certain documents or problems are missed.
May not uncover every issue: Instances or fraud, defective deeds, or clerical errors in the records, for example, probably won’t be caught in a title search. That’s why it’s important to also secure title insurance, which protects the buyer from financial loss if one of these issues are discovered after the sale.
How To Get a Title Search
The good news is that securing a title search is usually a hands-off process. “If you are purchasing a home with a mortgage, your lender or attorney will typically order the title search,” Kukwa said.
However, you have the right to conduct your own title search, too. Performing a title search on your own is more common in cash purchases, Kukwa said, but anyone can perform their own search at any time. This involves requesting records from the town and/or county courthouse, the recorder’s office and the county assessor's office, and reviewing them in detail. However, due to the time and extreme detail involved, you might prefer hiring a title search firm to handle it for you.
- A title search is an important step in the homebuying process that protects the buyer from financial loss.
- The title search ensures the current owner has the legal right to sell a property, as well as uncovers any liens or judgements against the property.
- Most mortgage lenders require a title search and title insurance.
- While it’s possible to conduct a title search on your own, most buyers pay to have a professional title search company perform this step.
Consumer Financial Protection Bureau. "What Are Title Service Fees?" Accessed July 27, 2021.