Title Searches

One of the most important necessities of investing in real estate, especially distressed properties, is conducting a title search. This is an absolute must that helps you determine who actually owns the property as well as learn who the homeowner owes money to. You definitely do not want to have a bunch of lienholders come after you just after purchasing the property. A title search can also tell you about special features such as easements or restrictions that affect your use of the property. You should never buy a home without running a title search.

These title searches are easy to obtain. Most homebuyers attain a title search through an online website (such as CityStandardData.com) or through a title insurance company who does it for them. Insurance companies, however, can charge up to $100 or even more for a basic current owner search. A much cheaper but not so easy way to do a title search is to go to the county courthouse to do the search yourself. Land record systems can vary dramatically from county to county, making the searching process very complicated. If you are a heavily involved real estate investor, it would be extremely beneficial to learn how to run a title search in your local region.

Most title searches can be done through a computerized database in the office of land records in the county courthouse. You can usually search by name or sometimes by address. When you have relevant search results, look through the deed chain to discover any breaks in the transfer of ownership. You want to at least find the first arm’s-length transaction so you can determine if the current owner received a full title transfer. You can also examine any open mortgages and other liens or judgments on the property to find out exactly how much is owed.  Closed mortgages and liens are accompanied by cancellations or release documents.

How are title searches useful to foreclosure properties in particular? Many homes in foreclosure carry more than one mortgage and sometimes multiple other liens. The recording dates of each mortgage or lien can tell you which lender has a priority claim on the property. With this information, you now know who to talk to or work with to negotiate a short sale.

Generally, title searches bring to light any issues regarding title of the property. As an investor, being aware of all problems on a property greatly reduces your risk and provides a better foundation on which to base your decisions. Therefore, whether through a title insurance company or by your own efforts, always run a title search on all of your properties.

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