Here in Chicagoland, homes tend to come with a lot of history. That’s one reason why title searches are so important to real estate transactions in our area.
When it comes to buying or selling a home, title is one of the most important concepts to understand. But it’s also one of the most frequently overlooked.
In Chicago and the surrounding suburbs, performing a title search is part and parcel of a typical home sale. But what is a title search, and what it does it mean for buyers and sellers?
What Is a Title Search, and How Does It Work?
In real estate, title is a broad term used to describe who has right to legally own a property — and, by extension, the right to use and sell that property. In some cases, there could be major or minor issues that impact the seller’s ownership claims to the home, and, thus, their ability to transfer title to a new owner.
That’s where the title search comes in. A title search is typically performed after the buyer has made an offer to purchase the property. At this point, a title company will perform an exhaustive search through documents and historical records, in order to determine that the seller indeed has a “clean title” to the property, free of any claims that could impede the sale of the home or become a financial or legal issue after the transfer of ownership.
Over the course of the title search, title agents will examine property records, land surveys, historical documents, and court records, looking for potential title defects, including but not limited to unpaid liens, unpaid back taxes, legal judgments involving the property, land disputes or zoning issues, fraudulent or incorrect documents, and probate issues.
Once the title agent has performed their search, they will issue an initial summary with their findings, highlighting any potential issues that were uncovered. At this point, the seller may work to remedy the issues, or both parties may negotiate to terminate or delay the sale. According to a 2017 report from REALTOR® Magazine, 11 percent of real estate professionals say that “titling/deed issues” caused “a delay in getting to the settlement table.”
If the title search reveals no evident claims or issues, the title agent will issue a summary of their findings, followed by a formal title letter. At this point, buyers, sellers, and their teams will generally be able to move forward with the transaction.
Why Is the Title Search Important?
Establishing a clean title is a crucial part of the real estate transaction — for sellers, buyers, and lenders.
For sellers, the title search is key because it can help prove “marketable title,” which indicates that the sale of the home will be legitimate and legal. For buyers, the title search helps uncover and resolve potential title defects, ranging from unpaid liens to recorded easements. These issues are not discovered early, they could become the buyer’s responsibility down the line. Finally, mortgage lenders can have some reassurances that they are making a secure, reasonable investment in financing the buyer’s home loan.
For these reasons, lenders typically require a title insurance policy as a requirement for obtaining financing. This protection, commonly called lender’s title insurance, helps protect the lender against claims for past liens or encumbrances. This one-time fee is generally paid as part of the buyer’s closing costs.
Here in Chicagoland, sellers pay for a title insurance policy for the buyer. Title insurance protects the buyer against possible liens, improper documentation, or other title-related risks associated with the property.
Making Title End-to-End Easier
At Baird & Warner, we believe that buying or selling a home should be easier, at every step of the way. That’s why we offer the convenience and confidence of one-stop shopping, with mortgage and title services all available in-house.
Baird & Warner Title Services is an award-winning industry leader, and one of the top title companies in Illinois. Our full-service, integrated approach can help make sure your real estate transaction is seamless and closes quickly and smoothly, thanks to our team’s depth of expertise, combined with access to the best technology available.
We offer a network of more than 1,000 attorneys who specialize in real estate and who have been vetted to make sure they bring the most knowledge and local insight to the closing table. Baird & Warner Title Services can also perform a preliminary title search for agents going on a listing appointment, making them an expert on the property as soon as they walk in the door. And with 28 closing offices conveniently located throughout Chicagoland, Baird & Warner Title Services can help make it seamless to coordinate all aspects of your closing.