Important Steps that Mortgage Lenders Must Keep in Mind During Title Search Process
November 9, 2017
When a buyer wants to buy a property, it is important for it to have clear titles to avoid legal hassles later. This is what makes title search such an important process in home loan lifecycle. A title search determines if seller has the right to sell their property and that the buyer will receive all rights to the property for which they are paying. This search is a comprehensive procedure that involves scouring through records and identifying any document that may impact the title of the property.
As a mortgage lender, title searches are all the more important for you as they give you assurance that the applicant will be sole owner of the property and that the title is clear. Title searches are either conducted by an examiner, led in-house or even outsourced to mortgage service provider. Regardless of who conducts the title search, educating yourself about the process will empower you to determine that the job has been concluded efficiently.
Sequence of Title Transfer
Also known as chain of title, the sequence consists of all the owners of the property right from its present owner to the original one. This information is available in public records that can be obtained from the Recorder’s office or County Clerk. You can also acquire this information from privately owned title companies that maintain these records. In case the chain of title is incomplete, the potential claimants are brought to court where they have to establish their legal rights to the property. If they fail to prove their ownership, they have to renounce all claims to it in the future.
Real Estate Taxes Applicable on the Property
Tax search would reveal the status of real estate taxes that are either up to date or overdue/unpaid from preceding years. It is important to note that any taxes that remain unpaid on the property create liens, authorizing the government to put up that property for sale to recover overdue taxes.
Inspection of the Property
The person who is ordered to inspect the property will draw a report regarding any matters that could impact its title or ownership. It is inspector’s job to validate the size of the property and identify areas that require improvement. They must also check if there is anyone else living on the property that has been unrecorded. If there is an undocumented easement or any other evidence that can affect the title, it is duly noted by the inspector and informed to the customer. The role of inspection is to validate all the information that has been obtained during title search.
Due Diligence Regarding Previous Owners
Any unfulfilled liens against the seller or previous owner should be noted and their existence at the time of property ownership should be determined. This is important information because the property is liable to be sold in order to satisfy the lien. Any unpaid taxes, liens or judgements will always hold precedence over lender’s or buyer’s right over the property. In case such judgments are identified, then they must be removed by the property seller before the title is transferred to new buyer.
Lender, along with seller and buyer of the property, can close the mortgage transaction after all the defects in property’s title have been cleared. It is only after completing all these processes can the buyer gain clear title that is free from all claims and defects. All this is necessary to ensure smooth closing and finalization of the deal.
As a lender, it is extremely crucial for you to conduct comprehensive title searches. If you are looking for an outsource partner for title support, look no further. Expert Mortgage Assistance has the right experience and experts to handle everything from title ordering to closing services. Contact us today and allow us to fulfill your mortgage title requirements.