When you buy a home, you are buying more than the walls and roof. You are buying the legal right to own the property, known as title. Before a sale closes, someone checks that the seller has the right to sell and that no hidden claims are attached to the property. That is the job of a title search and title insurance.
What title means
Title is your legal ownership of real property. It is evidenced by a deed recorded with the local government. Over the years, a property can pass through many owners and pick up liens, easements and other recorded matters. A clean transfer of title means the new owner receives the property without unexpected claims from others.
The title search
A title company or attorney examines public records related to the property, such as deeds, mortgages, court judgments, tax records and liens. The goal is to confirm the chain of ownership and identify anything that might affect the buyer’s rights. Common issues a search can reveal include:
- An unpaid mortgage or home equity loan that must be paid off at closing.
- Liens for unpaid taxes, contractor work or court judgments.
- Easements that give others the right to use part of the property, such as for utilities.
- Errors in past deeds or records.
- Questions about heirs or prior owners.
Many issues are resolved routinely before closing, such as paying off the seller’s existing loan from the sale proceeds.
Two types of title insurance
Even a careful search cannot catch everything. Title insurance protects against certain covered problems that were not found, such as a forged signature in a past transfer or an unknown heir. There are generally two kinds of policy:
- Lender’s policy: protects the lender’s interest in the property, and is usually required if you have a mortgage.
- Owner’s policy: protects your own interest as the owner. It is often optional, but many buyers choose it.
Unlike many types of insurance, title insurance is typically paid once, at closing, and an owner’s policy generally lasts as long as you or your heirs have an interest in the property. Who customarily pays for each policy varies by location and can be negotiated.
Reading your title commitment
Before closing, you will usually receive a title commitment or preliminary report. It describes the property, names the current owner, lists requirements that must be met before closing and notes exceptions the policy will not cover. Review the exceptions and ask about anything you do not understand, especially easements or restrictions that could affect how you use the land.
Getting good answers
Title questions often involve legal issues. A title officer can explain what a commitment says, and a real estate attorney can advise you on whether an item is a concern for your plans. Ask which title services you are allowed to shop for, as costs and service can differ. To start your home search, reach us through our contact page.
How Title Fits Into the Closing Timeline
Title work happens largely behind the scenes, but it follows a predictable path. Knowing the general sequence helps you understand when to expect documents and when to ask questions.
- Contract signed: Your agent or lender sends the contract to the title company or closing attorney, who opens a file.
- Search ordered: The title examiner reviews public records related to the property.
- Commitment issued: You receive the title commitment or preliminary report, listing requirements and exceptions.
- Requirements cleared: The seller’s existing loans are scheduled to be paid off, and other requirements, such as releases or corrections, are addressed.
- Closing: Documents are signed, funds are distributed and the deed and new mortgage are recorded.
- Policies issued: The final lender’s and owner’s title policies are typically issued after closing.
If something unexpected appears in the search, the timeline may shift while it is resolved. Responding quickly to requests from the title company helps keep things on track.
A Worked Example: An Old Lien That Turns Up
Imagine a buyer under contract on a home that the seller has owned for many years. The title search turns up a lien recorded by a contractor for work done long ago. The seller believes the bill was paid, but no release was ever recorded. Before closing, the title company asks the seller to provide proof of payment or to obtain a recorded release from the contractor. If that cannot be done in time, the parties may agree on another solution, such as holding funds at closing until the lien is resolved, depending on what the title company will accept. In this case, the search did exactly what it was designed to do: it caught a problem before the buyer became the owner.
Questions to Ask About Your Title Commitment
- What does each exception mean, and could it affect how I use the property?
- Are there any easements that cross the yard, driveway or areas where I plan to build?
- Are there recorded restrictions or covenants, such as HOA rules or limits on fences or outbuildings?
- Is a survey recommended, and would it change any exceptions in the policy?
- What will the owner’s policy cover, and what will it exclude?
- Are there endorsements available that would add coverage for my situation?
Common Misunderstandings About Title
- “The lender’s policy protects me.” A lender’s policy protects the lender’s interest. An owner’s policy is what protects your own interest.
- “Title insurance covers everything.” Policies have exceptions and exclusions. Review them before closing.
- “A clean search means there are no risks.” Some problems, such as forgery or undisclosed heirs, may not appear in public records. That is why title insurance exists.
- “Title and deed are the same thing.” Title is the ownership right; the deed is the document that transfers it.
Questions Buyers Ask About Title
How long does a title search take?
It varies with the property’s history and the local records office. Many searches are completed well within a typical closing timeline.
Do I need a new owner’s policy if I refinance later?
An owner’s policy generally continues as long as you own the property. A refinance usually requires a new lender’s policy for the new loan. Ask your closing professional about your situation.
What happens if a covered title problem appears years later?
You would contact the title insurer named on your owner’s policy. Keep your policy with your important home records.
