If you’re trying to sell your Texas house fast, you may be wondering whether a title search will slow things down.
While the title search process can be a hassle, it is essential to protecting buyers and sellers in any real estate transaction.
What is a Title?
A property title is a set of legal documents that protect a bundle of rights for the legal owner of that property.
Those rights include:
- Right of Control – how the owner uses the property within the confines of the law. Is it a home, a business, or something else? What kinds of structures are on it, if any? What kinds of improvements does it have? In the case of a home, a homeowner’s association can also have a degree of control, regulating things like colors of paint used or the types of trees planted.
- Right of Possession: who owns the property now, who paid for it (or is paying for its mortgage), and who is responsible for taxes. If there is an outstanding mortgage or other loan, the lender splits the title with the owner. The loan acts as a lien against the property.
- Right of Exclusion: who can and cannot enter the property. For private homes, the property owner can usually refuse entry to anyone except law enforcement and certain utility workers.
- Right of Disposition: this is the ability to legally sell the property, or rent it out.
What is a Title Search?
A title search answers this very important question: who owns the property, and who has the right to sell it?
The title search process is a review of public records to determine the legal owner of the property. The searcher establishes the chain of ownership, and goes back many years to ensure every previous sale of the property was done legally.
Title searches also look for liens or claims on the property. The most common type of lien is a mortgage, which is typically not a hindrance to a sale, as long as the mortgage is paid and current.
Other, more problematic claims can include:
- A “mechanic’s lien”, which is a claim made by a contractor or home service provider against the title if they were not paid in full.
- A lawsuit involving the property, such as one by a neighbor over a dispute.
- Unpaid property taxes owed to the county.
- A federal tax lien against the property’s owner.
- An ownership or heirship dispute after the owner or previous owner has died.
- A claim of ownership in a divorce.
- An unpaid child support lien from the State of Texas or another state.
In order for a typical sale to go smoothly, a title must be clean or marketable. This means that a title search doesn’t find any liens, claims, judgments, or other red flags like those mentioned.
Besides all of the above, a title search will also discover any deed restrictions and limits set by the city or county where the property is located. This is important for the buyer to know, in case they had specific plans for adding, changing, or improving structures on the property.
Does a Seller Need a Title Search?
Typically, no, a seller does not need a title search. However, if you are selling your home and you are worried about a potential problem, you can conduct a title search before you place the property up for sale. That way, any issues that could come up at closing won’t surprise you.
How Do I Perform a Title Search in Texas?
A title search is most often done by a title company abstractor or property attorney hired by the buyer.
The abstractor will research public records and legal documents related to property ownership, and use that information to build a title abstract. The review includes deeds, county land records, tax records, and any legal matters that popped up, like divorces and bankruptcies. When that work is done, the abstractor will create a title abstract that identifies the current legal property owner and prior owners. It may also include property surveys and easements.
A more thorough report generated by the title search is called an Ownership and Encumbrance report. This includes all the fine details like chain of ownership and any lawsuits or other issues.
While a title search can sometimes be concluded in a day, it usually takes up to a week. Older homes, with longer ownership chains, can require more time to complete a title search.
How Much Does a Title Search Cost?
A title search will cost between $75 to $250 in most cases. More complicated searches can cost up to $1,000.
The cost depends on the title company used and the type of searching that is required. Title companies may add other fees as well.
Can I Do a Title Search Without Hiring a Title Company?
Yes, you can a title search yourself. However, it is discouraged by most experts, because it is a complicated process.
You can find many of the records you need for a title search by visiting the county clerk’s office in the county where the property is located. You can find every Texas county clerk here.
Other records, such as a property tax statement, may be available at the county assessor’s office.
Doing a title search yourself is a bit like performing electrical or plumbing work on your own home. If you know what you’re doing, great! You can save a little bit of money. But if you don’t have any experience or training, you could end up costing yourself a lot more in the long run.
What is Title Insurance?
Most lenders require buyers to purchase title insurance along with the title search.
A title insurance policy protects the property buyer from any errors or omissions by the title company.
Here’s an example: if a title search failed to identify a $10,000 lien against a house, the lienholder could sue the buyer after the sale closed, and the new owner would be responsible for paying the lien. Title insurance would cover that claim.
Other mistakes covered by title insurance include missed ownership records, forgery and fraud, and overlooked easements.
The Texas Department of Insurance regulates title insurance premiums. You can use this chart to see how much you should expect to pay if you’re purchasing a policy.
What Happens if a Title Search Finds a Problem?
If a title search uncovers an issue that you didn’t already know about, it can completely derail your home sale process.
The buyer can demand you resolve the issue. For example, that could mean you must pay off a lien that the search discovered.
Alternatively, the buyer may agree to proceed with the sale, but at a much lower price.
It can also bring the sale to an end. Most home sale contracts include provisions for problems discovered by a title search that entitle the buyer to walk away without penalty. This includes refunding any deposits they made.
In any case, an issue discovered by a title search can disrupt or ruin your ability to sell your house fast.
Can I Sell My House if I Don’t Have a Clean Title?
You may be wondering what happens if you want to sell your house, but you don’t have a “clean” or “marketable” title.
As mentioned earlier, a clean / marketable title is free and clear of any judgments, liens, ownership questions, or other issues that you must resolve before the property can be legally sold.
Here’s some great news: if you think you may have any claims against your property, or if a recent title search has found problems, Local Cash Buyers can still buy your home! We buy houses with liens, judgments, and other claims. We can even buy your house if problematic easements, restrictions, or other issues pop up in a title search.
Best of all, we buy houses fast. Here’s how our process works:
- You contact us to request a free, no-obligation consultation.
- We make a brief visit to your property at a time that works for you.
- Within 24 hours, we make you a written, all-cash offer.
- If you accept our offer, we hire a title company and close within 7 days.
You’ll never need to worry about paying for a title search when you sell to Local Cash Buyers. We take care of all closing costs, including the title company and title insurance! And, there are no additional fees, commissions, or charges.