Consider a Title Search Before Buying a Home
The red-hot housing market of 2001-2005 is over, and that means not only slipping home prices and sagging sales, but mass confusion.
Specifically, errors, and opened loopholes for document fraud regarding the millions of documents recorded on property titles this decade.
Due to this rising and concerning trend, homeowners are encouraged to look into their property title records. It’s no different than checking one’s credit or history of your motor vehicle — except that your property is probably much more valuable. Immensely valuable.
According to TitleSearch.com, title searches are more often showing some common errors in this day and age. When clients check the title search on their property, they are often surprised to find old liens, ownership not accurate, and even mortgages taken out without their knowledge.
With that in mind, Mortgage Foundation has compiled a list of 10 issues that may arise without your knowledge — and why you may want to consider having a title search conducted before taking ownership of a property.
1. Unreleased mortgages. Although the account for a prior refinanced mortgage may be paid off, lenders also must file a lien release with the county records office to remove the old mortgage from your property title. The extreme volume of home mortgage refinance activity lately has resulted in lenders becoming less careful in filing these documents.
2. Property vesting. A title search will show the current ownership structure, if a property is owned individually, jointly, as tenants-in-common, tenants by entireties, or even as a corporation. A death in the family, or divorce are also reasons to verify title search records.
3. Incorrect liens. Liens can become recorded on a property due to county clerk error, or misfiling of property tax payments.
4. Document fraud. Increasingly, criminals are using property records fraud to commit crimes, such as identity theft, without notice to the owner.
5. Assessed value. The county or town’s assessment of your home may not be accurate, and if it does not represent the true taxable value of property in today’s market, that may result in inflated taxes.
6. Prior owners records. The gap between the contract and closing dates allows a loophole where liens or mortgages from a prior owner may not be cleared from property records.
7. Other party mortgages. By using loopholes in the system, third parties can take out a mortgage against one property and have it recorded against another property, resulting in a lien on the title.
8. The deed. A title search provides a stamped, recorded copy of the deed, which can be invaluable as proof of ownership, or residency. You can avoid any clouds on your title by shoring this up at the very beginning.
9. Pre-purchase research. A title search shows the original purchase price and date of the current owner, listing the mortgages and liens that came after. This way a buyer knows the home’s history and the seller’s current financial situation before making an offer.
10. After sale verification. After purchasing a property, the title search is checked, to verify the correct names are on the title, and that records are recorded properly. It is then that you can proceed and be pre-qualified for a home loan without worry!