Home Buying Title Search: The Key to Uncovering and Clearing the Potential Missing Link
One step that takes place once your offer is approved is a title search. Before title can be transferred, the seller must provide evidence of a marketable or negotiable title, one that is readily salable locally.
This step is necessary to discover potential problems or missing links to the title (legal ownership) of the property. Title searches are usually conducted by the buyer’s real estate agent, attorney, or loan officer. Marketable title is not a perfect title. The title does not need to be free of all links. In the case of a mortgage assumption sale, the buyer has negotiated and will accept the sellers title with the current mortgage as a lien on the title.
Evidence of marketable title through title examination is usually provided by a title company. Records sought include public records of deeds, mortgages, long-term leases, options, installment agreements, easements, planned subdivisions, judgments entered, deaths, marriages, bankruptcy filings, mechanical liens, zoning ordinances, property taxes real estate or personal, miscellaneous appraisal for improvements, mortgage releases, and reading pendens (pending links) notices.
The search for the given piece of real estate will establish a chain of title, which must be unbroken for the title to be good and therefore marketable. Involves tracing successive title transfers, beginning with the current deed and working back, usually at an appropriate time (usually 40 to 60 years), often tracing back to the original title, the last instance of government ownership . If there is a missing link in the title chain, it is called a gap. A missing link in the chain of title creates uncertainty as to the path of ownership and proof of ownership. These missing links may be the result of a failure to record a deed, fraud, an unknown heir, a secret spouse, a faulty survey of the property, or a dispute between the parties. Any one of these uncertainties is of sufficient concern to a buyer to threaten the marketability of the security.
If these missing links can be bridged by obtaining proper title clearing documents, the transaction can proceed safely. If not, the sale should not close. If no problems or missing links are found in the search, the title company issues title insurance. This is for your protection. Title insurance ensures that the property you buy is as stated in recorded deeds, surveys, and other documents. You can pay a single premium for title insurance when you buy the home. Then you don’t have to pay another premium unless you refinance your mortgage.