A quick summary
Buying a home? If you’re on a time crunch, you’ll need to know how long each step of the process can take. So, you might be wondering, how long does a title search take? This step can make or break your deal so it’s vital that you do your homework ahead of time.
Key Topics
For first time buyers, or even repeat buyers, the home buying process can be a complicated one. From making an offer, to closing the sale, there are many steps in between that can lead to some confusion. But never fear! We are here to make sure that you know the ins and outs of the process and in this article, we’ll delve deeper into title searches.
What is a house title search?
Firstly, a house title is the term used in real estate to describe an owner’s rights to a property. Before you buy a home, you’ll need to check that the owner is the only one who is claiming this title and they have the correct rights to sell it to you. Here’s where title searches come in.
A title search is done by an attorney or title search company, who will examine public records, to determine who the rightful legal owner of a property is. The title search will also show any liens or claims against the property that could impact the purchase of the house. A clean title is required for a property transaction to take place.
Homes that are being bought with financing usually require a title search for the lender to approve the loan. The title search is almost like a property’s background check, and it protects both the lender and the buyer.
How long does a title search take?
The time that a title search takes depends largely on the complexity of the deal and the age of the home. While a super simple deal, such as a house that isn’t very old, may take just a few hours, usually a title search will take between 10 and 14 days. The older the home, the more owners it has invariably had and the more transactions that have been done. Which means that the older the home, the longer the title search will take as the company or attorney will need to wade through more information.
How much does title search cost?
A title search can cost anywhere between $75 to $200, depending on the state that you’re situated in. This is usually the price of the settlement services fee, however there is also the title insurance premium which is given to the buyer to ensure that they are now the rightful owner of the property. This can cost between 0.5 and 1% of the purchase price.
The title search report should give you a comprehensive overview of the documents connected to the property and serve to highlight anything that may cause an issue with the property purchase. This gives a buyer more information that could be crucial to their property purchase.
Who completes the title search?
An attorney or a title company will do the title search. Depending on the state, the process can vary to some degree. However, usually the attorney or title company will do their research at the county courthouse, the recorder’s office and the county assessor’s office. These days, many of these records are available online and aren’t too complicated to find.
The title search will involve looking for information in:
- County land records
- Tax liens (both federal and state)
- Construction liens
- Judgments
- Property plats
- Divorce
- Bankruptcy
- Probate cases
- Deeds
Title searches often include information on the property’s mortgage, taxes, and any other problems that may present themselves. All the information is synthesized, collated, and presented in the form of an abstract report.
When is a title search done when buying a house?
The title search is either initiated by the lender or the buyer before a loan is approved. Title searches usually take place during the closing process, once the buyer has made an offer on the property, after the seller has accepted the offer but before the buyer takes ownership of the home. Lenders will often require a title search to be done before they will approve a loan.
Another situation where title searches are often conducted is for real estate investors who are being offered a property at a discount. This is done to make sure that the discount doesn’t come with a nasty surprise attached to the property.
What happens after title search?
Once the title search has been completed, the buyer will be given a preliminary title report, which will indicate whether there are any problems with the property’s title. This will give the buyer a good idea as to whether they want to continue with the closing process or not. Some problems can be sorted out, while some can result in the termination of the deal.
If the title search comes back clear or the buyer decides to proceed, the next step will be for the lender to approve the loan and if there are any issues with the title, the buyer and seller will need to agree on how to proceed. The closing process can continue thereafter, and the property will change ownership.
Closing thoughts
The more you know, the more comfortable you will feel with the property buying process. While title searches are just one part of the process, they’re an important part to get to grips with. You can make more informed property purchasing decisions by reading more of our articles in The Lender on topics for buyers, sellers and different types of real estate investors.