How a Title Search Protects Buyers From Unknown Liens

For buyers, the title search is one of the most important steps in the purchase process. It uncovers claims against the property so they can be addressed before closing, not after.

What Can a Title Search Identify?

A professional title search can identify many types of claims and interests:

• Mortgages and deeds of trust
• Judgment liens against current and prior owners
• Property tax liens and delinquencies
• Federal tax liens
• Mechanic's liens
• HOA liens and assessments
• Easements and rights of way
• Restrictive covenants and deed restrictions
• Ownership history and chain of title
• Probate issues and heir claims
• Outstanding interests in prior owners

For a full discussion, see our article on what a title search looks for.

What Happens If a Lien Is Found?

1. Confirm: The title team confirms the lien is valid and applies to the property and seller.
2. Determine if applicable: The lien may only apply to a prior owner and may not affect the current transaction.
3. Obtain payoff: If payment is required, a payoff statement is requested from the lienholder.
4. Require release: A requirement is added to the title commitment's Schedule B for the lien to be paid or otherwise resolved.
5. Obtain curative documentation: The seller provides the necessary documents to resolve the lien.
6. Refer disputes legally: If the lien is disputed, the parties may need attorney assistance.
7. Address per underwriting: The title insurer determines whether the title is insurable as-is, with exceptions, or after curative steps.

Example

A buyer contracts to purchase a property for $700,000. The title search reveals:

• A current mortgage of $310,000
• An old judgment from 2014 for $14,000 against the seller
• Delinquent HOA assessments of $3,500

All three are addressed at closing: the mortgage is paid off, the judgment is satisfied, and the HOA is paid. The buyer receives title free of all three.

Title Search vs. Title Commitment vs. Title Insurance vs. Curative Work

These four concepts work together:

• SEARCH: Identifies what is in the public records. See what is a title search.
• COMMITMENT: Shows what the title company found and what must be done before policy issuance. See how to read a title commitment.
• CURATIVE: Resolves the issues found. See Title Problems & Curative Solutions.
• POLICY: Protects against certain covered defects not discovered. See what an owner's title insurance policy covers.

Why Cash Buyers Need Title Work Too

Some cash buyers assume that because there is no lender requiring title insurance, no title work is needed. This can be a costly mistake. Even without a lender, a title search and owner's title insurance protect the buyer's investment from claims that could surface after the purchase.

FAQs

How far back does a title search go?

The search typically goes back through the chain of title to establish a clear chain of ownership, often 30 to 60 years or to the last time the title was examined. See how far back a title search goes.

What if the title search misses a lien?

The owner's title insurance policy may provide coverage for certain covered defects that were not discovered, including certain liens that were not identified during the search. The specific coverage depends on the policy's terms and conditions.

Is a title search the same as a Property DNA Report?

No. A Property DNA Report is an informational research tool that can help you understand a property early in the process. It is not a title search, title commitment, title examination, title insurance policy, legal advice, or survey. Learn about Property DNA Reports.