“Would you like for us to perform a title search and would you like title insurance?” These are two questions that we ask before we begin any real estate transaction. The response from most of our clients is, “what is a title search and title insurance, and more importantly, how much is it going to cost me?” For today, I hope to shed some light on these questions and explain why it is always recommended that you have a title search and title insurance for every property that you purchase.
A title search is like a history lesson on the specific property. A title searcher, usually an attorney or paralegal, will look through the public records in the county where the property is located to determine who actually owns the specific property and if there are any encumbrances on the property that need to be cleared up. Each title search is as unique as the property is itself. Some title searches are more difficult and time consuming than others. Some can be brutal and require looking at hundreds of documents over several decades.
The more difficult searches usually occur when land has been passed down from one generation to the next. These searches typically do not have a deed transfer on record with the County Register of Deeds. Therefore, a title searcher must review the County Estate files to see who inherited an interest in the property. When a decedent leaves a Will, the Will controls who gets an interest in the property. When a decedent dies without a will, the North Carolina laws on intestate succession control who gets the interests. In the second situation, the title searcher must piece together the decedent’s family tree to figure out who are the decedent’s heirs. If you are in anyway familiar with property in Lee and Chatham Counties, you will know that this situation is typical as families routinely pass land down for multiple generations.
A title searcher finds all this history and reports it to the title insurance company. The title insurance company will then issue a title insurance policy to the property owner. This insurance policy will cover the property owner to ensure that they are receiving full value for the property they are buying and assist the property buyer in clearing up any title issues after purchase. Even if a title searcher searches the public records flawlessly, which does not always happen, there could still be some flaws in the public record. And there is an infinite amount of ways something could be flawed. For example, a legal description could be missing a measurement, or the measurement could have a typo. This could change the boundary line of a property, and you have less or more land than you thought. Or, if the property were passed through a decedent, the decedent could have a secret child that inherited an interest in the property, which means that you do not own 100% of the property interest. These types of issues, and countless others, may not be revealed by title search. The title insurer will take on this risk and ensure that you, their policy holder, gets a good title to the property.
So, please always get a title search and title insurance policy. Like a lot of things in life, it is much better to have it and not need it, than to need it and not have it!