You might have heard a title examination is an essential part of the home buying process, or perhaps you’ve heard that your “title is clear” when the bank gives final approval to close on a home. But what exactly is the examination process like and what does it entail?
Here’s the short explanation:
A title examination is an investigation of a property’s legal history and a closer look at all the things that affect the title of the property you want to purchase. Past transfers, descriptions, wills/trusts, mortgages and liens, etc. should be reviewed by a title attorney to make sure the title has passed correctly and legally to each new owner.
And here’s the longer one:
As a title represents an owner’s right to a piece of property, you want to make that each transfer of ownership followed the law so there aren’t any problems that might arise for you. For example:
- Mary sold her house to Joe in 2002.
- Joe sold the house to John in 2006.
- John sells the house to you in 2017.
You want to make sure that Mary, Joe, and John transferred the title properly and that there are no encumbrances on your soon-to-be property.
What’s an encumbrance?
In the title examination process, an encumbrance is anything that can affect your property, usually things like old mortgages, tax and street takings, right of ways, attachments, and judgments.
When a title examination is completed, you’ll know if anything on this list is currently affecting your property and will need to be resolved prior to closing.
A clean title search is necessary for a property to be eligible for title insurance coverage, which is required by most lenders and loan programs. At first a title exam may seem a bit unnecessary, but in the end it can help ensure the uninterrupted enjoyment of your new property.
If you are ready to find the home of your dreams, please don’t hesitate to contact us today!