Embedded Files
A Seller's Guide:
TLDR: Title is the concept of ownership rights whereas a deed is the physical document that demonstrates ownership. A title search is a review of the previous owners to ensure the buyer receives a clear title after the purchase.
TLDR: Title is the concept of ownership rights whereas a deed is the physical document that demonstrates ownership. A title search is a review of the previous owners to ensure the buyer receives a clear title after the purchase.
One essential task in the transfer of ownership from seller to buyer is a title search. A title search is, as the name implies, a search through historical land records for ownership (title) claims to ensure the property will be truly the buyer’s after closing. The title company will look through the chain of title in your local land records department to ensure there were no mishaps with transferring the property throughout the years.
Claims to ownership can be in the form of mortgages, liens, or judgements, and the title company will ensure that the property is unencumbered before the buyer purchases it. As an example of when a lien might exist, when you purchase a house and obtain a loan, your lender will file a mortgage with the land records department to ensure that if you decide to sell the house, the new owner won't buy it until you've paid off the debt to the lender. Your local municipality's land records department essentially maintains the track record of ownership and ensures everyone gets paid before transferring ownership.
What is a title, deed, and title search?
What is a title, deed, and title search?
The subject of title can get confusing so let’s introduce some of the language.
The Title
The Title
The title of a property has to do with ownership rights and is a concept, not a physical artifact.
The Deed
The Deed
The deed, on the other hand, is a physical document that exhibits and transfers ownership.
A Title Search
A Title Search
A title search is, as the name implies, a search through historical land records for ownership (title) claims to ensure the property will be truly yours after closing. Before you close, the title company will look through the chain of title in your local land records department to ensure there were no mishaps with transferring the property throughout the years.
Chain of Title
Chain of Title
Your local municipality's land records department maintains the track record of ownership called the chain of title. The chain of title doesn't only list past property owners. It also lists other forms of ownership, including mortgages, liens, and judgements. A search into the chain of title ensures current owners and ownership claimants are appropriately compensated before transferring ownership. The new lender will want to ensure its collateral is unencumbered by other ownership claims before you buy it.
Clear Title
Clear Title
Having a clear title is referring to a property that is free of any outstanding claims to the property. A property that is encumbered by other claims to ownership is said to have clouds on the title.
Fun Fact
Fun Fact
You may have heard of a lien on a property. When a court awards a judgment to a creditor for money owed, that creditor may place a lien on a property, which must be paid before the property can be sold to a new buyer. A title company ensures payment is remitted to any creditors and the buyer receives a clear title.
What is a title company and what do they do?
What is a title company and what do they do?
A title company, often referred to as a settlement company, is eponymously named for the type of work it performs: conducting the title work and coordinating settlement. These are two different camps of work and each involve a significant amount of effort, so let’s review what they entail.
Title work involves...
Title work involves...
Conducting a title search through historical land records to see if there are any liens or other blemishes on the property
Satisfying any liens against the property by paying entitled parties to ensure the buyer receives a clear and marketable title
Issuing title insurance for the lender and/or owner
Settlement includes...
Settlement includes...
Preparing paperwork for signature, including the settlement statement
Coordinating with the lender
Ensuring all contingencies are satisfied
Managing the escrow account, which is the collection and distribution of funds in a bank account held by the settlement company
Recording the deed transfer with the local land records department after settlement
Page updated
Report abuse