Having a professional Title Search is an important step that should be ordered by every home buyer quickly after they have entered into a contract to buy a home. Yes, you may see who the seller is online in the county tax records, but there are possibly more specifics out there that require a professional search.
Did you notice that I said should be ordered? (because it isn’t automatic)
In Virginia, we use Title Companies to conduct closings and, when one of my buyer clients ratifies a contract, I will send a copy of the contract to their mortgage lender and a copy to the Title Company.
In my initial conversation with the processor at the Title Company, I request they order a Title Search since the mortgage processor will also need a copy down the road.
The home buyer needs to order a title search
Virginia may be different than other states because it is a “Caveat Emptor” state, which means that it is ultimately the buyer’s responsibility to investigate all aspects of the house they plan to buy before the closing.
I have read blog posts where the writer (probably a paid writer) recommends saving $200 by doing this important research yourself. In my professional opinion, this really is a foolish way to save a little cash on a critical legal issue.
So, homebuyers need to order or ask their title company to get a title search done quickly just to make sure there isn’t an issue that could delay their ability to close on their dream house.
Family members, trusts, and liens
A friend recently shared her real estate story with me when I was on vacation… describing the story of buying a piece of land to build a summer home. As it turned out, the seller wasn’t truly authorized to sell them the property, a fact they discovered 10-months into the transaction after they hired a lawyer.
Immediately all I could think of asking about was their title search.
Unfortunately, there wasn’t a buyer agent on their side to ask for a title search early on since they assumed one had already been done by the friendly seller’s agent. Ugh!
A few years ago, a title search showed that all of the adult children needed to sign the sales contract and one of the brothers, who lived out of state wasn’t being cooperative. Ugh again… because sibling rivalries never end!
But the most common title problem I used to see were unrecorded Certificates of Satisfaction, these important documents are issued when sellers have refinanced their mortgages showing the old mortgage is “Satisfied”.
This hasn’t been a problem for a while, but I’m sure many missing CS documents are lurking in county records right now.
Mortgage lenders don’t want to see Titles with cloudy problems
If you are getting a mortgage, you should know that mortgage underwriters will want to see there is a “clean” title. They will want to see the title report or Title Binder showing that it is insurable, protecting them from future issues.
The contract that I use here in Vienna real estate sales is created by the Northern Virginia Association of Realtors. It is important to note that it allows sellers to delay the closing up to 10 days to clear up a title problem, but it does not give buyers any protection if their mortgage lock is expiring because of this preventable delay!
In reality, no one wants to see a problem that may delay a closing.
If you are a home buyer who just ratified a sales contract, then contact your Title Company today and have them complete a full title search right away.