|Title Search is a Confidence Check on a property at question to determine from the public land records what rights there are to the property which you are about to purchase and who owns those rights.
What would be the worst case if you don't order title search?
Let me give you an example. A young and inexperienced investor decides to buy a foreclosure property. Extremely excited, the investor sees that the price of ownership published in the auction papers is far below the market price and makes a decision to buy the property. The investor even decides to drive around the property and evaluates physical condition and overall state of the property. Using some quick mathematics, the investor makes a final call to commit to the purchase and rushes to the foreclosure auction and purchases the property. There is no happy ending to this story. The investor made a huge and unfortunately common mistake - no title search. People who previously owned that particular property had numerous federal and state liens against the property - in the order of 1 million dollars. Itís not commonly known that most liens stay with the property, not owners, therefore, our young investor, all of a sudden, is liable to pay off 1 million dollars of someone elseís debt to the state and federal governments to receive a clean title. The investor's life changed to a life of battles in the courts and filing lawsuits.
What would happen if investor would have ordered a title search before the foreclosure auction?
Itís very simple. The investor would have found out that the liens on the property are too great to purchase it and would simply walk away from the purchase and would look for another property of interest.
Finally, after this example, we came to an answer.
Question: Why do you need a Title Search?
Answer: To protect yourself, because no one else will.
You need to know who bought and sold the property over the years and if there are any open liens, such as mortgages, deeds of trust or potential other owners who may need to sign the deed. In addition, the title search provides the present status of real estate taxes and other municipal charges that may be due and payable from previous years.
A judgment search will be performed to determine whether there are any unsatisfied judgments, federal or state income tax liens, mechanicís liens or other judgments against the seller or prior owners that attached to the property.