The Importance of a Title Search

Given all that goes into a closing, it's easy for the buyer to overlook one of the most important aspects of purchasing any property - a title search. That's because unless something bad is found in the chain of title, the buyer isn't going to pay much attention to it.

But a title search is incredibly important, and all buyers need one performed to protect their interest in land. It's expected (or at least, not surprising) to find that the seller has a mortgage on the home that needs to be paid off with the proceeds from closing. Less common, but no less important, are checks on whether the seller has a judgment against them that has attached to the land. If that's not paid off with closing proceeds, you could be in for a rude surprise after purchasing the property. Furthermore, the current or prior owner may have deeded out portions of the property in the past. The last thing a buyer wants is to find out they paid for a portion of land the seller had no title to.

Of particular concern is a practice I was recently made aware of. Properties in foreclosure may have more than one mortgage outstanding. Sometimes, the bank may choose to foreclose on an inferior mortgage and not address another superior mortgage. An unsuspecting buyer may look at the property and see a fantastic deal - $40,000 for a property worth $160,000! - but, of course, they're simply paying for the right to buy the property subject to the superior mortgage. The bank would then subject the buyer to payments on the superior mortgage or, if the buyer could not make those payments, foreclose again. The prevailing motto is caveat emptor, let the buyer beware. The bank is under no obligation to disclose this information; in fact, they're hoping someone takes the land without performing a title search.

These are only a few examples of the benefits of having a title search performed before purchasing a property. Given the amount of money a buyer ends up spending, a title search is well worth the investment.

#realestate #closing #titlesearch #mortgage

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