One of the fastest ways to run into problems when purchasing a home is to discover that it has a clouded title. It is the job of the title insurance company to ensure that you only take over ownership of a home that has a clear title. The title search must be done in order to view the history associated with the title, at which point it can be cleared for transfer should everything be in order.
Preventing Clouded Title Problems
The title search is very detailed, and will include a search of the history of the home. Depending on when the home was built, this search could cover a span of 50 years. Public records will note a number of events that could have had an affect on the ownership of the home, such as divorce, wills, court judgements, bankruptcy, and more. Title defects are not uncommon, with as much as 35% of titles containing at least one.
Should the preliminary report show a problem, action will need to be taken in order to make the necessary correction prior to proceeding with the purchase. In the case of severe problems, the buyer may need to completely back out of the purchase. The title report will also list qualifications under which the title can be covered. Coverage will not be in place for matters that are unidentified or cannot be solved.
The closing agent will provide a copy of this report to you, the real estate agent you are working with, and your attorney. It is very important to ask questions about anything you do not fully understand. Should the report reference any additional documents, such as easements or restrictions, request that you receive a copy of these as well.
A plot map should be included with the title report. This map will detail the land boundaries. You can cross-reference this map with the property lines you have been shown. Should you notice any major discrepancies, a professional surveyor should be hired to survey the property. Should easements be in place, ask that their location be shown to you. Future plans, such as having a swimming pool installed, can be affected by easements. Discuss any such plans prior to completing the purchase.
It will be the responsibility of the seller to handle any clouded title problems. The cost of fixing such problems will not fall to the buyer. The closing agent will notify the seller should any problems be revealed in the title report. Any and all liens will need to be paid off before the sale goes through. Additionally, any defects will need to be removed.
