Protecting the Transaction from Contract to Close
Title is the legal right to own, use, and transfer property. A clear title means the seller has an unencumbered right to convey the property to the buyer, and the lender's mortgage will hold a priority position against the property. The Title Search A title search reviews the chain of ownership for a property going back decades. The searcher reviews: deeds recorded in public record, mortgages and liens (including second mortgages, judgment liens, tax liens, mechanic's liens), easements and restrictions, and court records. What Can Go Wrong Unpaid liens: A previous owner did not pay a contractor, the IRS, or a judgment creditor. That lien attaches to the property and must be paid or released before the new buyer gets clear title. Forged documents: A deed signed by someone who was not authorized. Errors in the public record: Misspelled names, incorrect legal descriptions, missing notarization. Undisclosed heirs. Divorce decree issues: Property awarded to one spouse but not properly deeded out of the other's name. Mechanic's liens. Title Insurance One-time premium paid at closing. Protects against covered title defects discovered after closing. Lender's title insurance: required on virtually every financed transaction. Owner's title insurance: protects the buyer, optional but highly recommended. Policy provides coverage for as long as the insured party has an interest in the property.