How to Know If an Investment Property Has a Clean Title

If you're investing in real estate, you need to make sure the property that you purchase has a clean title. Learn how to know here.

Are you considering buying a home? Buying a property can be a big investment, and without a clear title, you may lose your home at any time. 

Figuring out how to know whether an investment property has a title should be at the top of the list of things to consider before buying a home.     

A lien on your home, mobile home, car, or other property can make your title unclear. A property lien is a financial claim against a person or a company that keeps you from selling the property until you receive the amount to be paid. 

Here’s everything you need to know about getting a clean title.

Clean Titles Protect You 

A clean title is essential because it protects the buyer from any kind of liability. Property insurance protects a real estate buyer against property claims by other parties, faulty documents, judgments against the property, and much more.

Even you transfer a title and a lien paid, most retail buyers will not buy a property without a clear title. 

For example, if the owner of a clearly owned house is the sole and undisputed owner, no other party can assert any legal claim to his property. Key takeaway: a clear title is a type of lien that can be levied without question of legal ownership of the property.

This is a form of ownership in which a lien is imposed on a creditor or other party that does not raise any question of legal ownership.     

Be sure to look into your ownerships rights more closely if you are a first-time home buyer and you have never dealt with this sum of money before.

Presence of a Lien: A Dark Cloud 

The presence of a lien creates a cloud over the property, which means that claims will not be released until the lien is invalid, which affects the owner’s ownership of the property. Title issues can also occur in separation or divorce situations if the heir does not have a document.      

A clear title helps to demonstrate the outstanding financial obligation attached to the property. It is important to prove that the owner has the right to sell the property.

If you have hired a property title company to search for a property, search the public records of the city or county to see if a deed has been filed with the city. This can happen before or after the crime is included in the public records filed with the city.      

If there are discrepancies in the property chain, it is best to consult a real estate lawyer to weigh up the risks associated with buying the property. The title company should inspect the public records before conducting a title search and check the previous deeds to ensure the title transferred is clean. Where the title ends up with the original owner of the property should be clarified.     

Check With a Consultant  

The tax consultant checks and verifies the completeness and correctness of tax liens and foreclosures throughout the process. After verification, they will work with you or an insurance agent to clarify your title and provide you with protection against unexpected financial or legal obligations.     

 Advisors carry out a thorough review of all tax liens, foreclosures, and due process on your property and accompany you for your added convenience with an insurer who will lend you an expert title. 

Lender Title Insurance 

When you get a mortgage, your lender may require you to take out lender title insurance. This insurance policy, whether from the lender or the owner, includes a thorough title search carried out by the title company.

The title search will uncover all liens on the property, but the insurance policy will protect against most liens that are not discovered, such as undeclared heirs, errors, and omissions in deeds of transfer and forgeries.     

If you are buying a brand new property without a cover story, it is important to take out title insurance. One example would be apartments in Chicago, which are often for sale. You can click for more info about them here. 

The advantage of property insurance is that you pay an upfront fee for the protection that lasts until you or your heirs own the property.

Regardless of your ownership of the property, in the event of a claim, the residential property insurance policy protects you against the costs of legal fees and the costs of defending the property, which are covered by the policy.     

New Properties Are a Risk

Brand new properties can be vulnerable to ownership risks, including title issues. There are also improper transfers of ownership by the developer or mechanic. Other issues include liens against contractors or subcontractors, unpaid property taxes, assaults, and forged signatures.      

Most real estate investment professionals – brokers, banks, insurance brokers, and the like – would have you consider that the only way to find a hidden title is to pay hundreds or thousands of dollars to a specialist company to look into the matter for you before you take out title insurance.

This insurance policy guarantees that the title company imposes several conditions for verifying the title history of your property and releases all liens, mortgages, or other unforeseen problems with the state. In other words, after the transaction is completed, you are the owner that there will not be any other hidden parties with ownership claims on the property.     

Title Companies 

The beauty of using a title company instead of paying for title insurance is that most title companies qualify to check the title chain and identify hidden problems.

Once you have found out that lenders need such a policy to protect you and that you, as the seller, have paid for it, you can ask whether you want to be the owner of the title on the policy.     

No one wants to invest in a real estate transaction a lot of time, effort, and money to resolve it when it is time to sell because of ownership issues. Clean securities are a vital part of real estate investment. Real estate investors should understand this before buying an investment property.    

A Clean Title  

A clean title is a great way to ensure that you own your own property and there will be no claims from other owners. This could be extremely stressful. 

Be sure to do your research beforehand so that you know all the ins and outs of buying a property.

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