Title Search

A title search is the process of examining the public records that affect a parcel of real property in order to establish the current state of its title: who holds ownership, how they came to hold it, and what recorded claims, encumbrances and restrictions run with the land. It is performed before a sale or a mortgage closes, because a buyer is buying whatever the seller actually owns and a lender is taking security in whatever is actually there.

Regulation X, the federal rule implementing the Real Estate Settlement Procedures Act, treats it as one item in a family. Its definition of "settlement service" at 12 CFR 1024.2(b) includes, at item (4), the "provision of title services, including title searches, title examinations, abstract preparation, insurability determinations, and the issuance of title commitments and title insurance policies." Those five are named separately because they are different acts: the search gathers the documents, the examination reads them and forms a judgment, the abstract is a written history of what was found, the insurability determination decides whether an insurer will stand behind it, and the commitment and policy are the insurer's promises. In everyday use "title search" is often stretched to cover the first three, and on a settlement statement the whole bundle may appear under a single line item.

What is actually searched. The subject is the public record, held by a county recorder, register of deeds, clerk or equivalent office, plus court and taxing-authority records. The searcher assembles the instruments affecting the parcel and reads them for four categories of problem. The first is the chain of ownership, meaning the sequence of recorded conveyances from some established point forward, and any break in it. The second is liens: mortgages and deeds of trust, judgment liens against an owner, unpaid property and income tax liens, and liens claimed by contractors and suppliers. The third is rights other people hold in the land, such as utility and access easements, rights of way, and mineral or water rights that were severed from the surface long ago. The fourth is restrictions on use, chiefly recorded covenants and subdivision or association declarations.

Priority is the reason sequence matters as much as content. A recorded interest generally takes its rank from when it was recorded, so the same three liens in a different order produce completely different outcomes at a sale. This is why a search is not a checklist of whether something exists but a reconstruction of what happened in what order, and why the recording act of the state in which the property sits is doing the real work underneath it. Recording, and what a deed does, are covered on the deed page.

What the buyer actually receives. The raw search results usually go to the examiner rather than to the buyer. What the buyer and lender see is a title commitment, called a preliminary report or prelim in some states: the insurer's offer to issue a policy, conditioned on stated requirements being satisfied before closing and subject to stated exceptions that the policy will not cover. The requirements are the practical output of the search, because they are the list of things somebody has to fix: a release of a paid-off mortgage that was never recorded, a satisfaction of a judgment, a signature from a spouse with a marital interest, a probate document establishing that an heir can convey. The exceptions are read against the policy rather than against the search, and the title insurance page covers that reading.

What a search cannot do, stated precisely. Two limits are structural rather than a matter of care. First, the record contains only what was recorded, so a forged deed that was recorded looks valid on its face, an heir nobody knew about leaves no trace, and an unrecorded easement by long use is invisible. Second, a human being read the records, and a competent searcher can still miss an instrument or misjudge an ambiguous one. Neither limit is fixed by searching harder. They are the reason the title insurance product exists, and its page covers what the policy does about them.

Who orders it, who pays, and whether you can shop. Custom varies by state and by county, and it is negotiable in the contract more often than buyers realize. On a federally related mortgage the Loan Estimate splits closing costs into "Services You Cannot Shop For" and "Services You Can Shop For" (12 CFR 1026.37(f)(2) and (f)(3)), and both subheadings require any item that is a component of title insurance or is for conducting the closing to be labeled beginning with "Title —". Which side of the line a given title item falls on depends on whether the creditor permitted the consumer to shop for it, under 12 CFR 1026.19(e)(1)(vi)(A). So the answer is on the form: read the two title blocks and see which one the search sits in.

One statutory rule cuts across all of this. Section 9 of the Real Estate Settlement Procedures Act, 12 U.S.C. 2608, provides that no seller of property being purchased with the assistance of a federally related mortgage loan "shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company," and makes a violating seller liable to the buyer for three times all charges made for that title insurance. It is narrower than it is usually described: it constrains the seller, and it is about the title insurance, not about every service in the bundle.

A defect found is not the same as a deal lost. Most of what a search turns up is routine and gets cleared from the seller's proceeds at closing, or gets written into the policy as an exception the buyer accepts. What a cloud on title is, and how the categories differ, belongs to the term for title defects.

The sequence at a typical residential closing runs like this.

1. The search is ordered, usually by the settlement agent, the title company, or a closing attorney, after the purchase contract is signed.

2. The records are assembled for the parcel: recorded conveyances back through an established starting point, plus mortgages, liens, easements, covenants and court records touching the owners.

3. An examiner reads them and forms a judgment on whether the seller can convey what the contract promises, and on what has to happen first.

4. A commitment or preliminary report issues, listing requirements to be met before closing and exceptions the policy will not cover.

5. The requirements are cleared, generally by paying off and recording releases of liens out of the seller's proceeds at the closing table, and by obtaining the missing signatures or documents.

6. The deed and mortgage are recorded, and the policy issues as of that moment.

A hypothetical example of the money side. Suppose a home sells for $410,000. The search turns up the seller's first mortgage with a payoff of $268,000, a delinquent property tax bill of $3,850, and a $1,200 municipal water lien nobody had remembered. Commission and the seller's other closing costs come to $28,700. All of the recorded claims are paid from the proceeds at closing, so the seller nets $410,000 minus $268,000 minus $3,850 minus $1,200 minus $28,700, which is $108,250. The tax and water liens did not stop the sale; they moved $5,050 from the seller's side of the ledger, and the only reason they were paid rather than inherited by the buyer is that the search found them.

What it gives you

• A documented picture of what the seller can actually convey, before the money moves rather than after.
• The list of specific problems that have to be fixed, which is what makes them fixable at closing out of the seller's proceeds.
• A record of priority, so a lender knows where its lien will stand and a buyer knows what runs with the land.
• Notice of use restrictions and easements, which change what an owner can build, park, fence or subdivide long after closing.

What it does not give you

• No protection against anything unrecorded: forgery, an undisclosed heir, a prior owner's fraud, a boundary agreement never written down.
• No guarantee that the search itself was complete. Human error in the records or in the reading of them is a real category of loss.
• No survey. Encroachments, boundary discrepancies and the actual footprint of improvements are a separate examination.
• The report a buyer receives is a commitment with exceptions attached, and the exceptions are where the unwelcome news usually sits, unread.