A Home Buyer Guide to Title Searches and Title Insurance

Title searches and title insurance can be confusing subjects for first-time home buyers and even those buyers who have previously purchased real estate in North Carolina and other states. In our home buyer guide to title searches and title insurance, we’ll clarify some of the confusion and better help buyers understand the reasons for title searches and why an owner’s policy of title insurance is a valuable asset to have when buying a home in North Carolina and other locations in the United States.

What is a Title and Real Estate Title Search?

One way to define a title in real estate property law is as a bundle of rights that mean a party may own either a legal interest or equitable interest in real estate property. A title search is performed by examining records in the offices of Register of Deeds, Clerk of Courts and other county and municipal offices. Depending on where the real estate transaction takes place, the title search may be completed by a real estate attorney or a title company.

What is the Purpose of a Title Search?

First-time home buyers often ask real estate agents to explain the title search and it’s purpose. The title search serves two basic purposes: first, it verifies the seller’s right to transfer ownership of the property. The second aim of a title search is to uncover any claims, assessments, debts, errors or other restrictions on the property. Simply put, a title search determines who owns the property and what interests may already exist in that property in order to make sure a buyer is receiving the title to the property free and clear.

Common Title Problems Discovered During a Title Search

A title search may uncover any number of title defects tied to the property a buyer is purchasing. Problems can range from mistakes such as filing errors to acts of forgery and fabricated documents that affect property ownership. Some other common title problems discovered during a title search may include the following: missing property heirs, liens, easements, encumbrances, unpaid real estate taxes, boundary/survey disputes, an undiscovered will, pending lawsuits and illegal deeds.

Title Search Uncovers Title Defects – What Now?

What happens when a title defect is discovered during the title search? In some cases, a title company or real estate attorney can help resolve issues on a buyer’s behalf when issues are discovered before closing. If the problem is something that is too costly for the buyer and seller to overcome, then the buyer can use the clear title contingency to walk away from the purchase of the home.

Owner’s Policy of Title Insurance

If a title search comes back showing a title is clear, then home buyers can continue moving towards the closing date and buying their new home. What happens if an issue pops up down the road after you buy the home? That’s where title insurance can come to your rescue.

An owner’s policy of title insurance protects a buyer against errors, omissions, or defects in the title to the property. Unlike the homeowner’s insurance policy required by your mortgage lender which protects for future loss, a buyer’s title insurance protects against claims or losses which occurred before you purchased the property.

Do you have any further questions about title searches, title insurance or any other subjects related to buying a home in North Carolina? Please do not hesitate to contact us here, at Red Door Company.