Title search - what do they do that I can't?

[Gene Walker]

I know it's easier to have a title company do the leg work doing research, but how can an investor throughly perform the same task? Do title companies have preferred access to information the average investors don't have? What are the best places to check for a complete DIY title search? Thanks, Gene Walker McCalla, Alabama

[Don Konipol]

@Gene Walker For properties that have been transferred few times and in a straightforward manner, the search in most counties is quite simple. For those numerous titles with complications, such as inheritance issues, missing heirs, multiple entity transfers, separation of title rights, partial lien releases, etc., it’s much more complicated. I have been involved in many transactions in which lawyers differed as to what was needed to obtain clear title. Tax liens improperly released, releases signed by people unauthorized to sign for the lien holding entity, etc. Just because a release of lien exists, doesn’t mean the release will stand up in court. The recorders office will file any document that meats certain general criteria, this is not approval that the document is effective. When a title company issues a title report, the title examiner will offer his opinion as to what issues have to be cleared in order for the title company to be willing to provide title insurance and take the burden of deficient title. Even with all the title company’s legal experience and knowledge, they still find themselves in the position of having either ‘missed’ something, or having a court interpret something differently than their attorney did. Many investors will purchase a property with very little cash investment, either through buying subject to an existing lien or through owner financing. They sometimes buy with a simple quit claim deed, and regard title insurance or paying for a professional search as an unnecessary expense. Since they have little invested they may be right. My opinion is that people with a more substantial investment and or legal liability in a property should obtain title insurance, except in some specific cases. I purchased a property from a government agency that insured title, so title insurance wasn’t necessary. Further, for the last 16 years the two major title insurers have been constructing a data base of all properties in the. U.S. This allows them to only need to research title since the last time their data base for that property was updated. I myself do preliminary title searches online to find any issues before I spend to much time with a property. But when I get more serious I let the professionals handle this complicated legal analysis.