What Is a Title Search When You Buy a Home, and Why Is It Important?

• A title search is the process of looking at historical records of a property and of the person selling the property.
• A title search reveals whether the seller has the legal right to transfer the home to you.
• This process takes place after you make an offer, and it could cost up to $250.
• Learn about more people and words you should know when buying a home.

When you buy a home, your mortgage lender will require a title search. The title search will take place after you have made the offer on the home, but before closing.

What is a title search?

A title search, or property title search, is the process of looking at legal records of both the property and the property’s current owner. The goals are to make sure that a) the seller is the legal owner of the home, and b) there are no outstanding issues or liens on the home that would prevent the seller from legally transferring the home to you.

Depending on the state you live in, either an attorney or title company will complete the title search. The person will look at records of deeds for the house, mortgages, liens, and property taxes, then put the information in a document.

Why is a title search so important?

A title search could reveal a number of issues, such as that the owner hasn’t paid property taxes or that there are conflicting reports about the boundaries of the property. If the report shows problems, you have a few options.

Decide who is financially responsible for taking care of the issues. The seller can take care of it or compensate you for dealing with it, you can split the costs, or you may be willing to take on costs such as unpaid property taxes. If you can’t reach an agreement with the seller, you’ll probably want to back out of buying the house.

If the title search results are severe, your lender won’t approve the mortgage. For example, maybe there is a lien on the home because the seller hasn’t been making mortgage payments and their lender is going to foreclose.

How long does a title search take?

The title search can take up to a few weeks, especially if the house is older — the older the home, the more historical records there are to sift through. If the house is relatively new and the case is uncomplicated, it could take just a few hours.

How much does a title search cost?

A title search for a single-family house could cost between $75 and $250.

You are allowed to conduct a title search yourself to save money. However, it will probably take you longer than it would with a professional, and if you aren’t trained in title searches, you might not thoroughly research all of the information.

Your mortgage lender will also require that you get lender title insurance, which protects the company should any legal issues arise with the title after you buy the home. You’ll also probably want to buy owner’s title insurance, which protects you financially. Hopefully, there won’t be any issues, but it’s always possible that the title search missed something. Together, both of these policies could cost you up to a few thousand dollars — but it depends on where you live, which companies you use, and the price of your home.