Of all the essential factors in real estate transactions, few carry as much weight as the title report. A title report is a document that discloses critical information about a property, including ownership details, liens, encroachments, and easements. It ensures that you understand the property's status and any potential issues before closing the deal.
What is a Title Report?
A title report provides a property's legal status and related ownership information. It includes details about the county, zoning laws, property value, and current tax information. The report also contains a comprehensive legal description of the property and paperwork on the chain of ownership, mortgages, and additional relevant information.
What to Look for in a Title Report
Title reports are designed to uncover any issues that may affect the transfer of ownership. Common problems include public record errors, liens, encumbrances, falsified documentation, estate plans, property disputes, falsified identity, and violated building codes. Carefully reviewing the title report helps you identify potential risks and make informed decisions.
The Three Schedules
Title reports are typically divided into three sections: Schedule A, Schedule B, and Schedule C. Each section provides specific information. Schedule A includes details about the current owners and the type of land interest. It also outlines the scope of the title search and title insurance. Schedule B highlights any claims, liens, or interests on the property beyond the owners. It also lists exceptions to the property ownership, such as HOA bylaws or easements. Schedule C provides a legal description of the property, including the lot and block details.
How to Obtain a Title Report
You have several options for obtaining a title report. One approach is to gather information about the property using available records and visiting the local courthouse to search property deeds and establish a chain of ownership. Another option is to seek assistance from the County Assessor's office, which might have additional tools for property title searches. However, it is recommended to work with a professional title officer who is well-versed in conducting accurate and comprehensive title searches.
Real Estate Title Report FAQs
Dealing with courthouse records, title officers, and title reports may seem overwhelming, but they are crucial steps in the property purchasing process. Educating yourself about title reports is essential. Here are some frequently asked questions to help you prepare for your next property purchase:
- What is a preliminary title report?
- Where can you find the preliminary title report?
- How do you order a title report?
- How do you run a title search?
- How long does title work take?
- What does a title search cost?
- Who pays for the preliminary title report?
- What's the most important part of a title report?
- What is title insurance?
- How do you find a good title company?
- What are common problems when buying a house?
What is a Preliminary Title Report?
A preliminary title report establishes property ownership, outlines the conditions of the title insurance, and includes a detailed description of the property, any liens or debts, and limited property uses. It allows buyers to address any unacceptable items before finalizing the purchase.
Who Provides the Preliminary Title Report?
The listing agent typically provides the preliminary title report. Attorneys or title companies review the property's title to identify any potential issues that could affect its sale. Their findings are documented in the form of a preliminary title report.
How to Order a Title Report?
To order a title report, you can hire a reputable title company. Search online or consult your network for recommendations. Alternatively, you can visit the County Assessor's office or courthouse to conduct a title search yourself. However, it's advisable to seek professional assistance unless you are confident in your ability to decipher the records accurately.
How Do I Run a Title Search?
The easiest and safest way to run a title search is by hiring a title company. They will assign a title officer to investigate the status of the property and provide you with the necessary information and title insurance. If you prefer to conduct your own search, you can visit the courthouse to gather information on past ownership and visit the County Assessor's office for additional tools. However, this method requires careful attention to detail and might be time-consuming.
How Long Does Title Work Take?
Title work typically takes around two weeks, depending on the person conducting the search. Experienced professionals can complete the search within a few days. However, without professional assistance, inexperienced buyers may take much longer to gather the necessary information.
How Much Does Title Work Cost?
Title work usually costs around $100. This cost covers the title search and preliminary report. However, it's important to note that title insurance is an additional cost. Title insurance protects against potential ownership issues and varies in price depending on the loan amount and state regulations.
Who Pays for the Preliminary Title Report?
Typically, the buyer pays for the preliminary title report as part of the closing costs. Although negotiations are possible, buyers are generally responsible for covering these expenses.
What is the Most Important Part of a Title Report?
When reviewing a preliminary title report, focus on three crucial sections: the legal description, property taxes, and mortgage liens. The legal description provides details about the property's location, zoning, and boundaries. Property taxes should be settled before completing the sale, and mortgage liens should be listed in descending order, with the largest lienholder at the top.
What is Title Insurance?
Title insurance protects the owner or lender against potential problems with the property's legal ownership. It comes in two main types: owner's insurance and lender's insurance. Owner's insurance safeguards the buyer from ownership disputes, while lender's insurance protects the lending institution. Title insurance ensures that the property's true owner is compensated in the event of a claim against the property's title.
How Do You Choose a Title Company?
To choose a title company, seek recommendations from your network or search online for reputable options in your market area. Look for customer feedback and reviews to ensure you find a trustworthy company. Take the time to ask questions and feel confident about the company's professionalism and expertise.
What are Common Property Title Problems when Buying a House?
Common title problems include liens, easements, encroachments, covenants, conditions, and restrictions (CC&Rs), and historic oversights and requirements. Liens represent legal claims of ownership, easements grant others the right to use the land, encroachments involve property boundary disputes, CC&Rs refer to homeowner association bylaws, and historic oversights have specific restrictions for properties in historic or protected districts.
Getting Help from the Pros
If you have any questions or concerns when reviewing a title report, it is advisable to seek guidance from professionals such as your real estate agent or an attorney. They can walk you through the right steps to address any issues that may arise. They can also provide valuable insights into the title contingency clause included in the offer.
Summary
Whether you're a first-time homebuyer or an experienced investor, understanding title reports is crucial when purchasing a property. A title report provides essential information about ownership and potential issues. By reviewing a title report, you can avoid potential problems and make informed decisions during the closing process.
