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You’re buying your first investment property.
Congratulations!
There’s quite a few hoops to jump through during the transfer and transaction process of buying an investment property — and that includes doing a title search.
Because a title search confirms the current owner has the right to sell the property to you, it’s a critical aspect of the process — and one to not go overlooked.
Whether you are buying your first investment property or adding another one to your real estate portfolio, you need to be educated on the nuances of a title search, which is exactly what we’ll cover in this article.
Let’s get started!
What is a Title Search?
A title search is the process of searching public records for a property that you are planning to purchase.
This search is done to confirm who currently owns the property.
If there are any liens, claims, or other issues with the property — also known as a cloud on title — you will uncover them during this process.
In most cases, buyers and lenders will work with a title company to conduct this search.
However, it’s also possible to conduct a title search on your own … which is exactly what this article is about.
When you’re buying a home, you’ll need to conduct a title search before the purchase can close.
This ensures that the property doesn’t have any outstanding financial or legal issues that would cause problems for a new buyer.
You may also do a title search on their own to learn more about a property before reaching out to the current owner.
How To Do a Title Search in 6 Steps
To conduct a title search, you’ll need to find and review several different public documents.
Here’s how to do it in 6 simple steps.
1. Locate important documents.
To start, you’ll need to find the property’s title and tax records.
In many cases, you’ll be able to find them on your state or local government’s website.
If you can’t locate the records online, visit your local courthouse or recorder’s office in person to look them up.
2. Review the chain of title.
What is a chain of title?
The chain of title indicates how the property has changed hands over the years.
Check to make sure that the name on the current title matches the current seller.
You’ll also want to review the entire sale history to make sure everything is legitimate.
3. Review tax records.
Next, you’ll also need to review the property tax records to make sure everything is in good standing and that the current owner has been making their payments.
These documents will indicate if there are any liens, outstanding taxes or a different cloud on title on the property.
You’ll need to review this information to make sure that the current owner doesn’t have any outstanding debts that could become a problem in the future.
4. Check for judgements.
The next step is to check to see if the current owner has any outstanding judgements — these are fees or other payments that are past due for the property.
If there are outstanding judgements, they could result in liens on the property in the future, so you’ll want to make sure they are taken care of before you purchase the property.
5. Find the abstract of title.
This is a document that contains a full summary of the property’s history in chronological order.
This will help you uncover any important information about the property that wasn’t present in the previous documents.
6. Perform a property inspection.
After you’ve uncovered all relevant documents for the property, the final step is to perform a professional property inspection.
We recommend that this should be done by a professional.
This will uncover any physical issues with the property that could affect its valuation.
And that’s a title search!
How To Do a Title Search: FAQs
Here are some of the most frequently asked questions about title searches.
Q: When Should You Do A Title Search?
Title searches should be performed before purchasing a property, during the closing process.
Many lenders will require a title search in order for you to secure a mortgage.
You may also opt to perform a property search at any time to learn more about a property you’re interested in.
For example, if there’s a property in your area that appears to be unoccupied, you might opt to do a title search to see who owns it and determine if it’s a potential investment opportunity.
Q: How Much Does A Title Search Cost?
It’s possible to do a title search on your own at no cost.
However, the process can be challenging and time-consuming, particularly if you’re not used to searching for public records on your own.
Because of this, most people opt to work with a professional title search company.
The cost of the title search typically ranges from $75 to $250.
The exact cost will vary on the type of property you’re evaluating, your location, and the company you’re working with.
The Bottom Line: Title Search
Doing a title search is a critical component of the house buying process, and one that should not be overlooked.
If you would like to do a title search yourself, utilize this 6 step checklist to do so quickly and cheaply.
If a title search reveals a cloud on title, the next step will be to resolve it using a quitclaim deed or another option.
If not, you’re well on your way to owning your first or next investment property!
