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How Long Does a Title Search Take? Why Do I Need One?

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“How long does a title search take?”

“Why must a title search be conducted?”

“Do I need title insurance?”

These are just some of the most common questions investors ask who are still wet behind the ears, which is to be expected. However, there are hundreds of thousands of dollars on the line, so you’ll want to learn all that you can about the many steps to buying property. 

At New Western, we want to provide investors of all experience levels with information that will help them understand the process of buying and selling real estate. 

Today, we will cover title searches, title insurance, and other title-related questions. We have a lot of ground to cover, so let’s get this show on the road!

Q: How Long Does a Title Search Take? 

A: The amount of time it takes to complete a title search depends on how complex the property’s documents are.

A title search usually requires that records from several sources be gathered and reviewed by the title company’s abstractor. Sometimes the examiner can complete the search in as little as a few hours (if it’s a newer property) or as long as 14 days (if it’s an older property).

Q: What Does the Abstractor Look For When Doing a Title Search?

A: They are looking for any negative marks against the property you want to buy. 

The point of a title search is to find any problems with the title. Some of the most common issues titles have included: 

  • Liens: A lien can result from an outstanding loan (like an old mortgage) where the property was used as collateral. The outstanding loan must be paid off at closing before the lien will be canceled. 
  • Judgments: Sellers struggling with their finances may have judgments against them. These are similar to a lien and must be paid off at closing before the judgment will be removed. 
  • Back Taxes: If the seller falls behind on their property taxes, the property is likely to have a municipal tax lien. This, too, must be paid off at closing before the title is “clean.” If the seller owes any income tax, the IRS or State may place a lien on the property. 
  • Easements: The title search should have a thorough overview of the property’s legal description to check that there aren’t any easements to or from a neighbor’s property. This can include a shared driveway, utility companies can access part of your property, or part of your property is restricted by farmland or conservation. 
  • 3rd Party Ownership Claims: This generally happens when a 3rd party (someone not the buyer or seller of the property) has an ownership interest in the property… Or if the property was not wasn’t conveyed to the current seller properly.

Q: Is It Necessary to Do a Title Search? 

A: Yes!

If you are financing your purchase, a title search is required by mortgage lenders. They will require title insurance, but you can use a different title insurance company if you wish. 

A title search is even recommended for cash buyers because the search is a layer of protection for your investment. You don’t want to be on the hook for a previous owner’s debts!

Q: Is It Necessary to Purchase Title Insurance?

A: No, but it is strongly recommended. 

Title insurance and a title search are for your lender’s protection as a buyer. It will protect the lender from any financial burdens that may arise due to title problems.

Even if you’re a cash buyer, title insurance will still offer you protection against financial loss if there’s a problem with the title after closing. 

Q: How Much Does a Title Search Cost? 

A: A title search can cost between $75 to $200. 

The cost of having a title search conducted on a property depends on the state the property is located. You can conduct a title search on your own, but if this is your first time doing a title search, hiring a title search company might be your best bet. 

Q: What Type of Title Insurance Do I Need?

A: Lender’s title insurance if you are a buyer. Owner’s title insurance if you are a seller.

Despite the two title insurances being the same, one protects the lenders, and the other protects the owners (the current owner). In addition, there are some additional coverages an owner can purchase: standard, extended, and ALTA Homeowner. 

 

Policy Protection Against the Risks of:

ALTA Homeowner’sStandardExtended
Record defects, liens, encumbrances, adverse claims or other matters not known or disclosed to the new owner that attach before date of policy✔✔✔
Forgery or Fraud in connection with the execution of documents✔✔✔
Undue influence on Grantor or mental incompetence of Grantor✔✔✔
Undisclosed or missing heirs✔✔✔
Wills not properly probated, mistaken interpretation of Wills and Trusts✔✔✔
Conveyance by minor(s), Conveyances by Corporation or Partnership without proper legal authority✔✔✔
Incorrect legal descriptions, non-delivery of deeds✔✔✔
Delivery of Deed after Death of Grantor✔✔✔
Clerical errors in recorded legal documents✔✔✔
Unmarketability of title as insured or lack of legal access✔✔✔
Unrecorded liens✔✔
Survey and Boundary questions✔✔
Claims of parties in possession not disclosed by the public records✔✔
Easements or claims to easements not disclosed by public records✔✔
An existing violation of a subdivision law or regulation affecting the Land:

  • You’re unable to obtain a building permit
  • You are forced to correct or remove the violation; or
  • Someone else has a legal right to, and does refuse to perform a contract to purchase the Land, lease it or make a Mortgage on it.

This covered risk is subject to:

  • A customer deductible amount of either 1% of Policy Amount or $2,500.00. (whichever is less)
  • Title Company’s Maximum Liability is $10,000.00
✔
Certain zoning issues that force you to remove or make modifications to your existing structure.

This covered risk is subject to:

  • A customer deductible amount of either 1% of Policy Amount or $5,000.00. (whichever is less)
  • Title Company’s Maximum Liability is $25,000.00
✔
You are forced to remove your existing structure (s) because it (they) encroaches onto your neighbor’s land.

This covered risk is subject to:

  • A customer deductible amount of either 1% of Policy Amount or $2,500.00. (whichever is less)
  • Title Company’s Maximum Liability is $25,000.00
✔

Post Closing Coverage:

Another party owns an interest in your title✔
Another party has rights affecting your title resulting from leases, contracts or options✔
Another party has rights affecting your title resulting from leases, contracts or options✔
Another party has an easement on the property✔
Your title is defective✔
Another party has the right to limit the use of your land✔
Your neighbor builds any structures, after the policy date, other than boundary walls or fences, which encroach onto the land✔

   Credit: MyTicor.com

Q: How Much Will Title Insurance Cost? 

A: On average, a title insurance policy will cost $1,000 — but it can depend. 

The typical title insurance policy can cost around $1,000, but it depends on the cost of the property and which state you’re buying in. Some premiums can cost as low as $110 and run as high as several thousand dollars. 

But with that in mind, knowing that you’re protected against any surprise title issues down the road that could cost your house is worth the added expense. 

Title Searches Are a Necessary Part of a Real Estate Transaction

There’s no other way to put it: you’re spending hundreds of thousands of dollars on a property, and title searches protect your investment. With those protections in place, there’s no need to know how long title insurance takes to complete your next investment because protection like that is worth the wait. 

 

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Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.