What is the Title Search in Maryland and Virginia Real Estate?
The most important duty of a title company is the review of the information they receive from a title search.
Most title company fees, with the exception of title insurance premiums, is to pay the attorney to review the title to make sure there are no unpaid liens, judgments or other claims against the title.
The title attorney will examine the title search "abstract" to make sure you are receiving a title "FREE AND CLEAR OF LIENS AND ENCUMBRANCES". You will also be offered insurance to protect you for defects that can't be found in a search.
All records of deeds, liens, judgements, security interests of all types are recorded in the land records of county offices, usually the courthouse of the county in which the home is located in Maryland or Virginia. This is a very important government office because it records all land and improvements, changes in ownership of all recorded properties.
Once you sign a Contract of Sale and your agent schedules settlement or closing with a title company or title attorney's office, the title office will contact a company known as an "abstract" company to perform a search of the title for the property you have contracted to buy.
This title search is a very important service in connection with your purchase. If the deed is showing no liens or encumbrances, title can transfer without any problems or delay. However, if the title search reveals that the present owner has defaulted on their loan and the mortgage company has proceeded to foreclose on the property, that information will be revealed by a title search. This doesn't happen often, but it does happen. It would surprise many home buyers to know the number of home sales where the purchaser and their agent will be informed of foreclosure proceedings by a title search. Sellers do try to avoid foreclosure by selling the home. Nothing wrong with that. However, it is in everyone's interest for the seller to disclose that fact when listing the property.
Other matters that could be discovered by a title search would be bankruptcy. If the present owner has an active bankruptcy proceeding, they cannot sell the property without permission of the bankruptcy trustee or a judge, depending on the type of bankruptcy proceeding filed. Home buyers often discover the bankruptcy proceeding through the title search.
Once the abstract company completes the search of the title, the report is sent to the title company or title attorney for an examination. The title attorney then determines whether or not the title can be transferred free and clear of liens and encumbrances.
This important duty is one of the things that we rely on title companies to do. 99% of the time, there is no problem. It's the 1% that home buyers in Maryland and Virginia pay title attorneys for their expertise.
The title search will insure that you receive a DEED to a property that is clear of all liens except the new ones placed on your property by your new mortgage(s) or equity lines when you purchase.
Deed should be free of liens and encumbrances. If the title search reveals any unpaid liens, from taxing sources, equity lines, commercial paper to finance appliances, furnace, air conditioners, etc., the seller will pay them from their proceeds. In Northern Virginia you should consider mechanic's lien insurance. You Homefinders.com agent will explain.