What is Involved in a Title Search?
Chain of Title
This is simply a history of the ownership if a particular piece of property, telling who bought it and sold it, and when. The information may be derived from public records—usually a County Clerk’s or Recorder’s Office—or obtained from title plants privately owned and maintained by title companies.
Tax Search
This is a search to determine the present status of general real estate taxes against the property. The tax search will reveal if taxes are current or whether any taxes are past due and unpaid from previous years. In addition, the tax search will indicate the existence of any special assessments against the land and, if so, whether or not these assessments are current or past due. A due and unpaid tax or special assessment is a prior lien or claim on the property above all others. Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.
Report on Possession
The purpose of this report is to supplement the information learned from the title search. In the eyes of the law, any buyer of real estate is assumed to have notice of all matters properly shown in the public records as to that real estate, as well as any information that an actual inspection may reveal.
Judgment and Name Search
One of the most important aspects of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners which were in existence while they owned the title. A judgment is a general lien against the debtor’s real estate and constitutes security for any money owed under the judgment. The real estate can be sold to satisfy the judgment.
It is extremely important to be sure that a title is not subject to judgments against the seller or previous owners. Title insurance provides this protection. A judgment against a person named Smith may affect the title of a seller named Smith, depending on whether or not they are the same person. So, all possible variations of the name must be examined. If a judgment is discovered that constitutes a defect in the title, it is pointed out, and the seller must then eliminate it before the title of the new buyer can be insured free and clear of any judgments.
Commitment
When these searches have been completed, North American issues a commitment to insure, stating the conditions under which it will insure the title. The buyer and seller and the mortgage lender can proceed with the closing of the transaction after clearing up any defects in the title, which may have been uncovered by the search and examination.