If you are purchasing property, a title report is one of the most important documents you should obtain or receive. Of all the things that have been deemed important to real estate investors and homebuyers over the course of a transaction, nothing can carry more weight than the title report. The title report is specifically designed to disclose all the information about the rightful owner and vested investors in the property to the details of liens, encroachments, or easements. 

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What is a Title Report?

A title report,  also known as the binder or title commitment, is a document that focuses on the legal information of a property and its related ownership. It has documents containing the results of the title search, which is required by most of the mortgage lenders and insurers.  It helps to know the present status regarding its encumbrance, whether it is mortgaged or free from claims. It is a promise to issue title insurance as it contains the information you and the title insurance company need to make its decision.

Features of a title report

  • It is prepared by an advocate, who after visiting the registrar’s office and inspecting the necessary documents, issues a title certificate. It is not mandatory that the search has to be conducted by the advocate. Any person can do the required survey of the title of the property himself by visiting the office of the registrar.
  • It is a prime document for the approval of a home loan. It helps the banking companies for the processing of loans.
  • The report is security regarding the purchase of the property. This report acts as security for the purchase of the property. This ensures safety to the buyer as he gets the assurance that the property is free from mortgage.
  •  A search report gives a buyer the confidence that he is undertaking a transaction with an authentic party.

The procedure of Title Verification

A search of the Title is undertaken in most real estate transactions by the Attorney or a Title company. The Title Company has to go through the previous records of the property as it might have “Chain of Titles” and has to check whether there is any Encumbrance on the property.

Sometimes a Legal Heirship Certificate is also necessary to determine the Title of the Property if there is more than one person as the owner of the property. The relation between the owners must be mentioned. Generally, this happens only if the Owner of the property is a deceased person and that person has more than one legal representative. In such a case it is essential to show the relationship of the deceased and his legal representative and also has to be checked whether any Objection has been raised on the Sale of the said property.

Mother Deed traces the origin of the property. This document helps in the further sale of the property, thereby establishing the new ownership. In case of the absence of the original Mother Deed, certified copies should be obtained from the registering authorities. Mother Deed includes the change in ownership of the property, through sale, partition, gift, or inheritance.  Mother Deed records the references to previous ownership in a sequence that is continuous and unbroken.

Title verification of property prevents legal disputes after the sale of a property. It is generally done with the help of the Attorney of the Buyer where the attorney by going through the previous records of the property. Therefore, Title verification holds a major significance in the Sale of a property.

Why do you need a title report?

You need to learn the details about the property before, the entity selling the property has the legal rights to do so.

  • You need to identify the details of any liens
  • You must discover vesting interests in the land.
  • You need to identify encroachments, easements, and rights-of-way.
  • You need to know if the property title is having any defects, which is attached that affects how to use it or anything which reduces its value.       

How Long Does Title Work Take?

Title work usually depends on the amount of time spent on the person who gathers information. It typically takes around two weeks, but it can vary from person to person. A title officer can get the information to a buyer a few days after they have come to an agreement with a seller. However, if the title work is done by inexperienced buyers, then they could take much longer to gather the information and data.

How Much Does Title Work Cost?

A title report is quite affordable and generally costs between 0.05%-0.15% of the property value. People usually pay a commission of around 1%-2% of the property value to real estate brokers. When we consider the cost of everything else involved in the transaction, the cost involved in the title search is very less. However, it is worth noting that the title search comes with insurance. The title insurance insures the result of the title search.  The benefits outweigh the cost incurred.

It is crucial to know what you are the consequences of purchasing a property be it a first-time buyer or a seasoned investor. The title report provides details of what you need to know before investing in a property to prevent potential problems. A title report is a protection against unforeseen issues packaged with the purchase of the property. It is recommended for the safety of the investor.