When you’re buying raw land, you need to do your due diligence, which includes surveying and inspecting the land. This is where the title search comes in.
If you’re wondering what does a title search include for a raw land purchase, then you have come to the right place. After all, you’ll want to make sure that the raw land you’re purchasing is legit.
As the name implies, the title search basically describes the rights of the owner. In other words, it tells you whether or not the person you are buying the land from is in fact the owner of said property.
Buying raw land or any property for that matter is going to be a significant investment so you’ll want to make sure the transaction is a legitimate one. Here, we are going to take a closer look at the title search while purchasing raw land and other aspects to ensure your transaction is legal.
As experienced property advisors, we are in the ideal position to provide you with all of the information you require regarding the title search and other factors when it comes to purchasing raw land.
Table of Contents
Buying Raw Land
The term "title" is used to define the owner's rights in a property. While it isn't a document like a deed, but rather "refers to the notion of ownership rights.
If you're buying a house, make sure the seller is the only person with a claim to the title. This verifies that the property is free of any other claims or liens, and that the seller has the legal right to sell you their house in the first place. This is when a title search is useful.
A property title search is when a title firm or an attorney reviews public records to ensure that there are no claims, liens, or concerns with a property that might lead to another person or entity claiming ownership.
This search is done to confirm that the property has marketable title and that the acquiring party's property rights are unaffected by encumbrances. Any real estate transaction requiring title insurance involves a title search.
Mortgage lenders demand a title search in order to give cash for a loan, therefore this covers residences acquired with financing.
Consider a title search for a home as a background check for a job application. This safeguards both the lender and the borrower. However, a title search can only reveal claims that have been documented.
A separate judgment search may be useful in bringing any unrecorded concerns to light.
How Does a Title Search Work?
A title search is generally undertaken on behalf of a prospective buyer by a title business or an attorney. A lender or other organization may commence the procedure in order to verify ownership of the property and ascertain if there are any claims or judgments against the property.
An attorney or title business will undertake research utilizing public records and legal papers to determine the vested owner, liens or other judgments on the property, and loans on the property while executing a title search.
While it is conceivable for a potential buyer or another individual to perform their own title search, it is not encouraged. Legal paperwork may be perplexing, and obtaining access to judicial records can be challenging.
Why You Need a Title Search
First and first, if you're going to acquire a piece of land from someone, be sure they genuinely own it and are the only ones who do. You'd be upset if you paid full price for the land only to discover you only own 20% of it, along with the seller's siblings and sisters.
If you intend to be the only owner, be sure that everyone who has an ownership stake in the property signs the deed conveying it. A title search will indicate if an estate has been filed in the county where the property is located if the owner or one of the owners is deceased.
The clerk of the court's office in the county was involved in the search. The estate division of the county clerk of court will be reviewed to see if an estate has been opened and whether or not a will has been probated, as well as to identify the deceased's heirs.
Another typical issue that a title search uncovers is if spouses who purchased the property together are still married or have divorced since then. I can't tell you how many times a seller believed they possessed the property because a district court judge ordered them to receive it as part of a divorce settlement, only to discover later that a deed was never completed for the ex-spouse to transmit the property to the selling spouse.
Imagine the nightmares you'll have if you had to go back to an ex and ask them to sign a deed surrendering their stake several years after the divorce order was finalized. One customer paid his ex-wife twice: first as part of the divorce settlement and again when she ceded her stake in the property to him so he could sell it thirty years later.
A title search will disclose if the amount of land the seller initially received when they purchased the property has changed. Is there any land that the seller has developed and split into tracts or lots? Is any of the land being used to expand or install a road through it? Is the boundary line different now that neighbors have submitted a revised plat?
When purchasing real estate, it is critical to do a title search to determine who the owners are, what fees must be paid in order to obtain clear title, and to ensure that the buyer receives all of the interest and property that has been bargained for.
Otherwise, a buyer may either find it too costly to resolve the difficulties that a title search would have shown, or they will lose their whole investment.
Carrying Out a Title Search
You should now have a basic idea of what a title search is and how it works. Now you must learn how to do a title search. A detailed investigation of public documents is usually included in an in-depth title search. This can be challenging since liens and judgments on a property can be filed in a variety of ways, depending on the jurisdiction.
Today, many title firms have developed comprehensive and systematic procedures for conducting these searches, resulting in enormous databases of regularly indexed data that make title searches faster and easier.
These "title plants," or vast stockpiles of systematically structured public data, assist speed up and assure the correctness of title searches.
A property's ownership history is shown in a chain of titles. When looking at the chain of title, you should be able to see the current owner as well as previous owners, all the way back to the property's original owner.
You may find this information by searching online for public records. If you can't locate them online, go to the recorder's office in your town.
You'll want to schedule a property inspection once you've made sure the property is clear of outstanding taxes. You should never miss this stage as an investment. Any irregularities or indicators of easement will be discovered during the examination. Before proceeding on, double-check that the property matches the title exactly.
Next, see if the present owners of the property are subject to any judgments. Unpaid fees or dues that resulted in a lien are examples of this. In such circumstances, the government has the right to confiscate the property at any moment and sell it to recoup the debt.
If any judgments are discovered during the title search, engage with the seller to resolve the matter as soon as feasible. Again, title insurance may be a fantastic method to protect yourself.
Then, double-check that all of the property's taxes have been paid. You don't want to come across any unpaid or past-due taxes. These can result in the government placing a lien on the property, which means the government can sell it. One method to safeguard yourself is to purchase title insurance.
What You’ll Find in a Title Search?
A title search, as previously said, might reveal some unforeseen legal difficulties. As an investor, you want to be aware of these as soon as possible. These concerns should ideally be addressed and fixed before the transaction is completed.
In some circumstances, a legal concern may be sufficient justification to leave. The following frequent legal concerns can be assessed by your lawyer or a title search company:
Caveats: You're probably most familiar with this phrase, which refers to the fact that another party has shown an interest in the property. Find out what your rivals are offering and see if you can outbid them or make a stronger argument for why you are the best buyer.
Covenants: Covenants are legal limits on what you can build on the ground where the property is located. If you were intending on expanding or adding an extra unit on the property as an investor, this might jeopardize your purchase.
Easements: An easement is a legal agreement that allows someone other than the owner to utilize the land. Before you make any judgments, you should find out who this person or entity is, why they have the right to utilize the property, and in what capacity.
Dirty Title vs. Clean Title
A title search verifies a property's legal ownership and determines if the property is subject to any claims. Title search discoveries that might result in a "dirty" title categorization include erroneous surveys and unsolved building code breaches.
A "clean" title demonstrates sole possession of a piece of property or land, whereas a "dirty" title suggests that the property or land is shrouded in doubt or disrepute.
Title Search Cost
A title search might cost anything from $150 and up to $1,000. The price varies depending on whether you're doing a simple land study or a complete ownership and encumbrances report. It also varies by state and the amount of information you want. Closing fees usually include the expense of title searches.
Title Search Insurance
Even the most experienced title search business or specialist might occasionally miss something, or a paperwork error can result in a document being ignored. It is possible to make mistakes, and these mistakes may be costly if you uncover a problem with the property after you have already finalized the purchase.
As a result, purchasers frequently obtain title insurance to protect you and your mortgage lender from financial loss if a title problem emerges during or after the transaction.
Both real estate owners and lenders are protected by title insurance against loss or harm caused by liens, encumbrances, or deficiencies in the title or actual ownership of a property. Unlike regular insurance, title insurance covers claims for events that occurred in the past.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling