When buying a house, the property history search is a critical part of the closing process. What really goes on, and what issues could arise? —-
This step is commonly referred to as a title search, title review, or property history search — but by any name, it involves delving into the formal records of a home and the property on which it sits. There are lots of potential red flags that could pop up once you start digging around, and the last thing you want as a new homebuyer is to later find out that there’s a massive tax lien (for example) tied to your address!
But what really goes on during a property history search? What kinds of issues could arise, and what are you supposed to do if something is uncovered?
To learn more about the actual process of property history searches, we took a deep dive into research strategies and spoke with real estate professionals to glean first-hand insight.
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What does a property history search entail?
A property history search involves a review of the property’s ownership and public records history. The idea is to find any possible snags in the chain of ownership before they become a legal issue for the buyer.
According to a National Association of Realtors® survey released in December 2021, problems with property titles accounted for 10% of delayed contracts and 4% of terminated contracts in the month of November.
While those statistics actually look pretty good — just 4% of deals fell through due to title issues, compared to 11% that were canceled because of appraisal problems — the data is solid evidence that property history is a key factor in successful homebuying.
“A title search is very important,” confirms top real estate agent Margaret Labus, who has 18 years of experience in the Lake Geneva, Wisconsin area. “While it may be daunting to look through title history, the exceptions are really important.”
Title exceptions are the different elements that are actually being hunted for during a property history search. Exceptions can include — but are certainly not limited to — the following.
A property deed differs from a property title. A title is the concept of legal ownership, while a deed is a physical piece of paper on which ownership is recorded.
Ownership of real property is conveyed through a so-called bundle of rights. This means that you (or whomever is the legal owner) have full rights to possession, control, exclusion, enjoyment, and disposition of the property — basically, when it’s yours, you can do what you want with the place.
During a property history search, researching the deed involves comparing the deed on file with all of the other accessible records and documents to make sure that what’s on record now checks out against the paper trail.
A house typically can’t be sold without a clear title, so the title search company will be looking for any inconsistencies with deed records.
Though a mortgage may show up on a property title for something as minor as a problem with properly recording the previous owner’s satisfaction of mortgage — which is generally a quick fix — sometimes, the solution is more complicated.
When a homeowner stops making payments on their mortgage loan, the bank will make efforts to recoup lost funds. This process generally begins with a notice of default, which kickstarts preforeclosure. If the mortgage holder fails to bring their loan back to current status, actual foreclosure will commence.
While it’s definitely possible to buy a foreclosed home, the transaction involves jumping through a lot of hoops and waiting weeks — or even months — between steps.
It’s rare that a home will be in foreclosure without anyone knowing about it, but a thorough property history search will nonetheless ensure that there won’t be any disputes related to mortgage on your way to the closing table.
A lien is a legal claim levied when a property owner owes money. Liens can absolutely derail a real estate transaction.
Liens can be brought against a property for anything from a mortgage loan to unpaid taxes to plumbing repair services that were never paid for. A thorough title search should uncover any valid liens — and it’s the seller’s responsibility to clear them up before they can sell the house.
If a homeowner has passed away, and a will is in place to specify to whom the property ownership should be transferred, the process should — in theory — happen smoothly.
Things can be trickier if there is no will and an estate thus has to go through probate, but in either case, there’s sometimes a risk of a long-lost relative popping up to claim rights to the property. And missing heirs can complicate more than just your homebuying process — imagine if you’ve happily owned your home for several months and then suddenly someone related to the previous owner emerges, insisting that they should have been the rightful inheritor and disputing your purchase.
A property history search will look for any record of wills or estate settlements that could potentially signal a problem.
Similar to the question of who gets a property in the event of a death, there can be disputes over who gets a property in the wake of divorce.
Again, this is generally decided either in court or between the couple parting ways, but this doesn’t mean all parties will be satisfied. Property history searches help sniff out possible trouble if someone insists that they were to have kept the house following a divorce.
Unpaid special assessments
Special assessments can come from governments or local municipalities — they’re taxes levied in the name of public improvements.
These assessments are placed on properties that will directly benefit from the particular enhancement project — though whether a homeowner is personally excited about this turn of events may be another story. Nonetheless, they’re a form of tax that must be paid, and any outstanding special assessments are likely to come up during a property history search.
Labus notes that title exceptions can also take the form of easements (legal access to a property, often for utility purposes or in the event of a shared driveway), issues with surveys (property lines are important!), or a homeowner’s association lien for unpaid dues.
But exceptions can take many forms, so don’t be shy about asking questions if the history search on your property-to-be brings up anything you’re not sure about.
“If there are any exceptions on the list that you don’t understand, you should have a conversation with the title company directly,” says Labus.
Where can you find property history details?
Okay, so we’re clear on what you might find in a property history search, but how do you actually go about finding anything?
It usually starts with public records — and there are more available sources to tap than you might think.
“Public records will generally include construction and sales documents, major financial events (like foreclosures), and significant insurance-related events — such as fires, floods, and tornadoes,” says Martin Orefice, an investor and property expert in Orlando.
Orefice notes that your city or state’s historical society may also prove useful if the house is particularly old. Historical homes, especially those that have been protected by a preservationist society, often have a fascinating paper trail even if there’s nothing problematic to be found.
Plat maps are another great source of information. These documents show how property is divided, which are especially useful if your potential home is part of a neighborhood and you’d prefer to avoid quibbling with neighbors over property lines.
As a real estate investor specializing in off-market properties in Houston, Marina Vaamonde has conducted numerous property history searches — and she’s noticed a recurring issue.
“Disputes over the boundary lines of the property are a really common red flag. I’ve had properties where different surveys show different property lines, which means that the buyer and seller quite literally don’t know what they’re buying and selling,” Vaamonde says.
Property surveys can be thought of as a more zoomed-in version of a plat map. Whereas a plat map will show the division of a large swath of land, a survey looks specifically at one parcel of that divided land. Cross-checking a survey against a plat map is a logical first step in the event of a boundary dispute.
Additional sources of valuable property history information include:
The sales listing. Property listings are already pretty thorough, and if the house has been sold more than once, the old listings should be floating around out there, too. You can always Google the address of the home and see what comes up!
The tax assessor’s office. Tax records are often available online and indicate the amount of property tax due on a property each year.
Census records can lend insight into previous owners of a home.
Land entry records can prove useful when trying to establish a chain of ownership — such as when a supposedly missing heir knocks on your door eight months after closing and claims that your home rightfully belongs to them.
If you’re purchasing a historic or otherwise older property, you can always ask the county library if they have any information about the area that may be relevant. While it’s unlikely that the librarian will have a book on hand detailing the origins of your specific proposed home, they might be able to point you in the direction of an unexpected informational tidbit.
What happens if there’s a problem?
Some property history search red flags are clear as day, such as when there’s a notice of default in public records.
But problems aren’t always immediately evident — especially if you’re not working with a lender to purchase your property.
“If it’s a cash transaction, you need to have a very keen eye out because there’s no safety net of a lender asking about this or that lien,” warns Labus. “Having an attorney is always a good idea when you’re looking at title history.”
Though your real estate agent can provide property history information and offer referrals to appropriate experts, agents are not allowed to provide legal advice in most states. Which means that even if you or your agent is the one to uncover something troubling about the title to your potential home, they can’t actually counsel you on what to do next.
That’s why it’s important to work with a closing attorney to facilitate a proper and professional title search — they have the knowledge and access to thoroughly investigate a property’s history, and the power to see the process through to resolution.
The good news — at least for you as the buyer — is that resolving title issues falls squarely into the seller’s court before ownership of the property can be transferred. Anything troublesome that pops up during a property history search will be brought to the seller’s attention, and they’ll have the opportunity to either pay off an outstanding balance (if it’s a financial issue), or to provide adequate documentation (if the problem involves inconsistency with records).
That being said, human error can and does happen, and it’s possible that a title problem can later be uncovered in even the most thoroughly vetted home. This is where title insurance comes into play.
Title insurance protects you financially from undiscovered liens, false or erroneous documents, unrecorded easements, and even claims of ownership. Coverage is usually equivalent to the purchase price of your home and lasts for as long as you own the property. This doesn’t mean you’ll be free and clear of any inconvenience, but title insurance at least means you won’t be saddled with someone else’s unpaid debts that weren’t known to you at the time of purchase.
Leave the property history search to the professionals
Though it might seem like Google searches and combing through public records is easy enough work to tackle on your own, this is one area of real estate you’ll definitely want to leave to the professionals — other than maybe poking around the library out of curiosity.
“Records are open to the public — but honestly, you wouldn’t know what you’re looking for,” says Labus. “I’ve tagged along with title searchers before, and it’s quite the maze they have to navigate to produce a title report.
“The title to your property is a lot of money on the line. It would be a penny wise and a pound foolish to do it yourself — hire those experts and make sure it’s done correctly.”
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