Your Title Search
You have taken all the steps of making sure your property purchase makes a great investment, you inspected it, you got your comparables you got all your cost figured and your ready to run with check book in hand!
Hold it for just on minute, you forgot the most important part of your property evaluation "The title search".
You have most likely heard it said that your profit is made from the purchase side of investing and this has some truth but your title search is the definitive process that determines profit or loss. To ensure marketable title, a title search should be performed. A title search is a process where someone searches the public records in the city or town where a piece of property is located.
The searcher will go through the grantor and grantee indexes and examine the documents recorded in the land registry concerning a particular piece of property.
A title search generally includes mapping a chain of title by examining all the recorded deeds concerning the property. A chain of title is established by determining that the present owner received valid title from the prior owner, and the prior owner received valid title from that prior owner on down the line for a certain number of years. The title searcher will determine if there are any encumbrances on the property, such as mortgages. If there are no encumbrances, the title is "good and marketable."
During a title search, several key things are examined. For instance, mortgages, real estate taxes, liens for sewers, roadways, sidewalks, and other municipal improvements, federal taxes, government claims, legal judgments, foreclosures, condemnations, covenants, and easements.
After a title search is performed, title insurance can be purchased to protect against anything that might have been missed. Title Insurance is a contract between the insured and a title company.
Under the terms of the contract, the insured agrees to pay a premium and the Title Company agrees to defend the title or pay losses the insured may suffer if the title is challenged or defective. Title insurance basically protects against defects such as prior fraud or forgery that might go undetected until after closing and possibly jeopardize ownership.
After title has officially passed, in most states, the deed must be recorded at the Registry of Deeds. Recording the deed officially establishes ownership and provides notice to others that you are the owner.
The title search:
- will tell you whether the seller has properly disclosed any "notifications" on the title e.g. an easement; and
- Allows you to be sure the details in the contract are accurate.
If you can't be bothered doing it yourself, there are title search companies that will do it for you. However, you are a professional and as a professional, you must no all aspects of your profession.
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