How to Confirm the Authenticity of a Property Title

Four Methods:Understanding Real Property TitlesConducting a Real Property Title SearchReceiving a Covenant of TitlePurchasing Title Insurance

If you are purchasing real property (a.k.a., a home or land) or using your home as collateral on a loan (e.g., getting a mortgage), chances are you will have to authenticate the property's title. When you authenticate a property title, you are in fact taking some action to assure the marketability of that title (or protecting against an unmarketable title). A marketable title is one that is free from any reasonable doubt as to its validity.[1] A title will generally be considered marketable if a reasonable purchaser would pay fair market value for the property. In order to assure the marketability of title, or protect against an unmarketable title, you can conduct a title search, request a covenant of title, or purchase title insurance.

Method 1
Understanding Real Property Titles

  1. Image titled Confirm the Authenticity of a Property Title Step 1
    Know what a property title is. A property title is a comprehensive term referring to the legal rights an individual has to the property in question.[2] Having title to a piece of property means you have ownership rights over that property and you can choose to do what you want with it.[3] Therefore, a title is not a tangible item; it is only a legal term conveying your rights to something.[4]
  2. Image titled Confirm the Authenticity of a Property Title Step 2
    Understand the difference between a title and a deed. While a title is not a tangible item, a deed is the legal written document that transfers title from one person to another.[5]
    • For example, assume Adam has title to Blueacre, a piece of land in California. If this is the case, Adam has certain legal rights to Blueacre because he holds title. If Adam wants to sell Blueacre to Brittany, Adam would give a deed to her (not a title). By giving a deed to Brittany, Adam has effectively transferred title from himself to Brittany.
    • This article will discuss what Brittany should do before the deed is given to her in order to ensure Adam can transfer title to her.
  3. Image titled Confirm the Authenticity of a Property Title Step 3
    Know when you need to authenticate a title. Title questions will always come up in two common situations. If you are in one of these situations, you should read this article to determine how to analyze title.
    • First, you will need to analyze title when you are purchasing property from someone else (for instance buying a home).
    • Second, you will need to analyze title when you are using your own property as collateral (for instance when you are obtaining a mortgage).

Method 2
Conducting a Real Property Title Search

  1. Image titled Confirm the Authenticity of a Property Title Step 4
    Consider hiring a professional. Before you start your title search, think about hiring a real estate lawyer or a title searcher, examiner, or abstractor.[6] These individuals make a living conducting title searches and because public land records can often be confusing and difficult to understand, it may be a good idea to hire one.
    • For help hiring a real estate attorney, check out this great wikiHow article.
    • For help hiring a title professional, talk to a real estate lawyer or your real estate agent. If you are using your home as collateral, talk to your loan officer.
  2. Image titled Confirm the Authenticity of a Property Title Step 5
    Go to your county recorder's office. If you will be conducting a title search on your own, start by going to the county recorder's office in the county where the land in question is located. A county recorder is responsible for recording deeds and other documents that affect title to real property.[7]
    • When you arrive at the county recorder's office, ask the receptionist where their public land records are. These are the documents you will need to search through.
  3. Image titled Confirm the Authenticity of a Property Title Step 6
    Bring essential information about the property in question. When you go to the county recorder's office, be sure you bring with you certain important information about the property you are searching for. You will need to bring the property address, the tax ID, the lot number, and the parcel number.[8]
    • If you do not have this information on hand, it can be found at the tax assessor's office in the county where the property is located.[9]
  4. Image titled Confirm the Authenticity of a Property Title Step 7
    Search public land records. Once you have found the public land records, you will use the property information you brought to find the records pertaining to the piece of property you are concerned with. Once you have found the relevant records, they will generally be organized in one of two ways:
    • First, the records may be organized in a grantor-grantee index. Here, every recorded document is indexed in both a grantee index and a grantor index, with each entry organized alphabetically by either the grantor's or the grantee's last name. The grantor is the person transferring title and the grantee is the person receiving title. To search these indices, you will need to establish a chain of title for the parcel of land. To do this, you will need to build the chain link by link. You will start by searching for the most recent known grantee (the current owner of the land) and you will trace ownership back, deed by deed, until you reach the point the land was owned by the government. Next, you will move to the grantor index and start with the first grantor in the chain (hopefully the government). You will move forward in time, looking under each grantor's name, deed by deed, to see if anyone conveyed an interest to anyone that is not in the chain of title you created in the grantee index. If both chains match up, your chain of title is mostly likely clean (although this does not mean title is clear).
    • Second, records may be recorded in a tract index, which is a single index containing every document affecting the piece of land in question. Here, you will need to sift through the documents and create your chain of title.
  5. Image titled Confirm the Authenticity of a Property Title Step 8
    Analyze your findings. Once you have found the relevant public land records, you will need to analyze them to determine the quality of title. When you inspect public records, you are looking for two things.
    • First, you are looking to see if the person trying to sell you the land actually has legal title to that land. If you are not buying land but using your property as collateral, you are looking to make sure you have legal title to the land. Doing this will be easy once you have searched the public land records. All you need to do is make sure you can trace ownership of the property to the current seller (or yourself), depending on the reason you are searching. Once you have created a chain of title, you will simply look through that chain and make sure all of the links are valid and lead to the correct current owner. In other words, you are looking at the chain of title to make sure every time the property was transferred, it was done so legally and properly.
    • Second, You want to look at the public land records to see if there are any encumbrances on the land. An encumbrance is a "right or interest that exists in someone other than the owner of an estate and that restricts or impairs the transfer of the estate or lowers its value.[10] Examples of encumbrances include liens, easements, covenants, mortgages, or unpaid taxes.[11]

Method 3
Receiving a Covenant of Title

  1. Image titled Confirm the Authenticity of a Property Title Step 9
    Understand title covenants. A covenant of title is an assurance, made by the seller of a piece of property in the deed document, that the seller has the ability to sell the land they are trying to sell.[12]
  2. Image titled Confirm the Authenticity of a Property Title Step 10
    Ask for a specific deed to protect yourself. Before you purchase a home or a piece of land, you should ask the seller to transfer a specific type of deed. Different types of deeds offer different levels of title assurances. Ask for the type of deed that will provide you with the protection you are looking for. However, the more protection you ask for, the more you may have to pay for the property. The different type of deeds include:
    • The Warranty Deed. This deed offers the most protection to a buyer because the seller promises to you that they legally own the property and that there are no encumbrances on the property.[13] A warranty deed is also a guarantee of title, which means the seller may be held liable if you find out after the purchase that the title is defective.[14] For example, if you buy a parcel of land and you are given a warranty deed, the seller will be liable and have to pay damages if it turns out they did not have the right to sell the land, or if there turns out to be an encumbrance on the land.
    • The Quitclaim Deed. This deed offers no protection for you. If the seller transfers property to you with a quitclaim deed, the seller is making no warranties about the title and is transferring only as much interest in the property as the seller actually has.[15] For example, if you buy a parcel of land and you are given a quitclaim deed, the seller will not be responsible for any shortcomings. If it turns out that the seller did not actually own the land, you may lose the property to the rightful owners. If it turns out there is a lien on the land, you will be responsible for that lien instead of the seller.
  3. Image titled Confirm the Authenticity of a Property Title Step 11
    Know what covenants are assured. If you receive a warranty deed, not only is the seller guaranteeing title, they are also making a number of inherent promises as well. When title is passed through a warranty deed, the seller is promising the following things, whether the deed explicitly says so or not:
    • Covenant of seisin. Here, seller is promising they own the estate they are claiming to transfer to you.[16]
    • Covenant of right to convey. Here, seller promises they have the right to transfer the property to you, and there are no restraints on their ability to sell.[17]
    • Covenant against encumbrances. This promises that there are no encumbrances on the land.[18]
    • Covenant for quiet enjoyment. Here, seller is promising that you will not be disturbed by any third party claims of title.[19]
    • Covenant of warranty. This promises that seller will defend you if there are any third party claims to title.[20]
    • Covenant for further assurances. Finally, the seller is promising to perform whatever may be necessary to perfect your title if it turns out to be imperfect.[21]

Method 4
Purchasing Title Insurance

  1. Image titled Confirm the Authenticity of a Property Title Step 12
    Contact a title insurance company. In order to insure yourself against any title defects, you should always consider purchasing title insurance. To start this process, contact a reputable title insurance company in your area and discuss their options. There are a number of title insurance companies out there and you should research them all before choosing. Here are some good options:
  2. Image titled Confirm the Authenticity of a Property Title Step 13
    Know what title insurance covers. While title insurance covers risks that are a matter of public record, it is the only method in this article that extends protection to non-recorded risks.[22]
    • "A standard policy usually protects against: off-record hazards such as forgery, impersonation, or lack of capacity of a party to any transaction involving title to the land; the possibility that a deed of record was not in fact delivered with the intent to convey title; the loss which might arise from the lien of federal estate taxes; and the expense, including attorneys' fees, incurred in defending the title."[23]
  3. Image titled Confirm the Authenticity of a Property Title Step 14
    Know what title insurance does not cover. While title insurance can protect against a number of title defects, title insurance usually does not protect you, the policyholder, against title defects that were known to you before buying the policy but were not disclosed to the insurance company.[24] Also, your standard policy will not protect against any encumbrance or defect that could have been ascertained by physically inspecting the property.[25]
  4. Image titled Confirm the Authenticity of a Property Title Step 15
    Consider added coverage. If you are concerned about the level of coverage of a particular title insurance policy, you can usually cover more by purchasing extended coverage.[26]
  5. Image titled Confirm the Authenticity of a Property Title Step 16
    Purchase insurance. Once you have chosen a company and a policy, you will purchase the policy. Generally speaking, title insurance will simply be a one time fee assessed at the time you close on your newly purchased home.[27] The cost of insurance is commonly 0.5% of the purchase price of a home.[28] For example, a home purchased for $200,000 will carry a cost of $1,000 for title insurance.[29]

Sources and Citations

Show more... (26)

Article Info

Categories: Buying Property