5 Implications When You Skip a Property Title Search

Everyone knows buying real estate is expensive. A home is the highest-value item most people will ever own. Beyond the property, you might have a range of other costs, like the title examination. Some might feel tempted to save money by skipping the property title search.

While the law doesn’t always require a title search, it is an essential step in the transaction. It verifies information about the title to protect buyers and lenders.

Why You Shouldn’t Skip a Property Title Search

Most buyers won’t have the option of skipping a title examination. Mortgage lenders require a title search to approve the loan. They also require title insurance, which you won’t be able to obtain without a title search.

However, some buyers might have the cash to buy a property outright with no loan. You might also have some other arrangement or alternative financing that doesn’t require a title search. Should you skip the title search in these situations? Let’s look at some of the risks.

Discovering Ownership Issues

One critical part of a title examination is confirming the chain of title. It is a historical record of every owner and transfer of the property. This process ensures the seller has clear ownership and identifies any discrepancies or defects, like missing signatures or incorrect names. It can also protect the buyer from future legal disputes by uncovering potential claims from heirs or previous owners.

Undiscovered Liens

Liens are legal claims against a property due to unpaid debts like taxes or contractor fees. Buyers risk inheriting these liens without a title search, which can complicate ownership because the lienholder has a financial claim on the property. It could result in legal problems or being required to pay the lien after buying.

Easements on Property

Easements are legal rights allowing others to use part of the property. Common easements are for access roads or utilities. Undiscovered easements can impact property value and restrict future development. A title search can reveal existing easements to identify issues that may restrict how you use the land.

Description Errors

One sneaky issue is the potential for description errors in the title. An accurate property description is essential because it describes what you’re buying. Something as small as an incorrect number or a misspelled word could cause a big problem. A title search could also discover boundary issues that may impact ownership rights. A title search gives you a clearer picture of what you’re buying.

Title Fraud

While not common, title fraud can be a significant risk for buyers. It can involve forged deeds, impersonation, or fraudulent transfers, leading to potential legal battles and financial loss. A title search helps uncover signs of fraud before the sale, ensuring the property’s ownership is legitimate.

Do you need a property title search for a real estate transaction? Click here to contact First National Title & Escrow. Our real estate law experts can perform a thorough title search to help you guard against these risks. Reach out now to learn more about our services.

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