Title Searches 101

A real estate transaction only occurs when a seller can convey clear and marketable title to a piece of property to a buyer.  Sounds pretty easy, huh?  Well, there’s a lot that the closing attorney must do before validating clear and marketable title.  This is an incredibly important step because if you were to close on a home without owners title insurance only to find out later your property is stuck with previously unknown encumbrances or past claims, guess who has to pay?  You.  Attorneys overall do a great job of validating title, but we’ve heard the one in a million stories that will make you think.  Your lender will most likely require lender’s title insurance, but don’t forget about owner’s title as well.  It is vital protection that can really come back to haunt you in the event you don’t secure it at the closing table.

In a continued effort to provide you with relevant information, Leigh Clack with Neel and Robinson (lenox@neelandrobinson.com)  reveals what all is involved in a title search.  If you have further questions, feel free to contact us or Leigh Clack directly.  She can be reached by phone at (404) 705-3690.

WHAT IS CHECKED IN A TITLE SEARCH?

  1. Chain of title = each deed from seller to buyer
    1. Legal description
    2. Signatures from all owners
    3. Proper execution (witness, notary, corporate seal for company)
    4. No “breaks” in chain = buyer who does not sign as seller later
    5. Most recent deed should match seller’s name on sales contract
  2.  Property taxes
    1. Enforceable for seven years
    2. All Georgia properties have county taxes; some also have city taxes
    3. Not removed by foreclosure or bankruptcy
    4. Interest and penalties due if paid late
    5. Homestead exemption and other discounts – determine if still applicable for current year
    6. Some cities/counties also collect water, garbage, other utilities
  3.  Open mortgages (security deeds)
    1. Current owner’s mortgages – confirm open – get payoffs
    2. Previous owner’s mortgages – confirm paid – get releases
  4.  Liens and judgments
    1. Liens for materials and/or labor are specific to each property
    2. Judgments against owners in chain of title attach to any property owned by that person
    3. Valid for seven years from filing – can be refiled to extend
    4. Common names may have judgments that are not theirs – need to confirm with social security numbers and affidavits
  5. Income tax liens
    1. Valid against all property of taxpayer
    2. Federal tax liens (IRS) valid for ten years – state for seven
    3. State liens removed by foreclosure – federal must be given notice and right to redeem
  6.  Pending lawsuits and divorces
    1. Lawsuits affecting subject property must be resolved
    2. Other lawsuits – confirm no judgment entered yet
    3. Divorces – must be resolved or have all parties (spouses and their attorneys) agree to the sale
    4. Probate/trust/estate/guardian issues – determine who can sell
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