How Much Does a Title Search Cost and Do You Need One?

As soon as a seller accepts your offer, you and your real estate agent will get to work fulfilling the contingencies set out in the purchase agreement. Your agent can schedule a home inspection while you secure a mortgage through a trusted lender.

One of the core processes of buying a home is completing a title search. This confirms that there aren’t any legal ties to the property that could prevent you from taking ownership of the home. 

The title search shouldn’t be overlooked in the home-buying process. This is an essential step that can alert you to potential issues down the line. Use this guide to answer your questions about title search costs, whether you need one, how to do it, and more!

What is a Property Title Search?

A title search occurs when the title company checks various public records to confirm there aren’t any liens or claims on the property that could prevent the buyer from taking ownership of the home.

Title companies review several different information sources to confirm that no one else could claim a right to the property or prevent the seller from transferring ownership.

Here are a few things that title companies are looking for:

• Outstanding property taxes: The current owner will need to pay any delinquent property taxes before they can sell the house. 
• Liens against the house: This is a claim to the property to satisfy a debt or obligation. For example, if a contractor did work on the house but the owner never paid them, the construction company could place a lien on the property. 
• Easements: This allows another entity to use the property. For example, if another home is built behind yours, the easement might allow the owner to use your driveway to access their property.  
• Open permits: The title company might highlight any open or expired permits that need to be closed. They can also bring up code violations that the seller should take care of before closing.  
• Ownership: The title company wants to confirm the seller is legally able to transfer the property. This prevents scammers from selling properties that don’t belong to them or former spouses from selling homes before a divorce is finalized. 

Think of the title search as an inspection of the legal aspects of the property. The title company wants to make sure the seller can legally sell the house or condo without any strings attached. This way, the delinquent taxes, open permits, and liens don’t get passed on to the buyer. 

Why Do You Need a Title Search?

The title search confirms that the current owner has a legal right to the property and can sell it. It proves that there aren’t any issues preventing the property from being transferred to a new owner or disputes that could cost the new owner money. 

Here are a few examples of issues that title searches bring up that affect the sale of the house: 

• Scams: a title search could find that the seller does not own the property and has no right to sell it. 
• Liens: the search could discover that the seller owes money on a home improvement project and the contractor put a lien on the house until the debt is paid. 
• Divorce: a couple may have split recently and both names are on the title. Both partners need to agree to sell the house. 
• Probate: the house was passed down to an heir, but others are challenging it. 
• Boundary disputes: a neighbor challenges the actual property lines. 

Title issues are sometimes nefarious if someone is trying to scam buyers or there are extensive liens on the property.

However, there are times when the issues are simple. Filling errors, misspellings, and other minor issues are easier to clear up and can allow the home sale to move forward.

Are All Liens Bad? 

In most cases, a lien on a property’s title is a bad thing. It means the seller owes money to a private creditor, is delinquent on their property taxes, or has other debt. However, if the seller is still paying off a home loan, they could have a mortgage lien on their property. 

Owners with mortgages can still sell their homes. When they close, the proceeds from the sale will cover the remaining mortgage and the lien will be cleared. This will allow you to move forward with the purchase. 

As long as the homeowner is up to date with their mortgage payments, a mortgage lien is a normal part of a title search and shouldn’t be cause for concern.

What Records Do Title Companies Check?

Title companies check several public records departments when they assemble their reports. This allows them to provide comprehensive insights into the ownership of your future home. Here are a few departments they check and records they search through:

• Deeds
• County land records
• Federal, state, and county tax records
• Divorce, probate, and bankruptcy cases
• Liens and judgments
• Easements and maps 
• Hidden claims
• Improper record keeping or lost records

Many title searches can be done digitally because of modern record-keeping. However, the process of looking up your home records in each of these departments is still laborious. Your title company has access to online tools and software that streamlines this process and compiles information in one comprehensive report. 

How Much Does a Title Search Cost?

Title searches generally cost between $75 to $200, depending on your title company, location, and home. If the complexity of the search is greater than normal, the cost of your title search might be a few hundred dollars to account for the extra records pulled and the time spent researching them. Some title companies also charge administrative fees. 

Another extra cost to look out for is an expedited service charge if you need the report in a hurry. Most title searches take 10 to 14 days to complete, but some buyers need the reports within a few days. If you have a fast-approaching closing window or need the report immediately, you can expect the title search to cost more. 

Your lender should be able to build the title search fee into your other closing costs, so you do not need to pay for this report upfront. If you are paying for the property in cash, the title search will be added to your final closing statement.

Most people feel there is enough value in conducting a property title search that they don’t mind the added cost. However, it is still important to ask about the title search fee before you agree to it. This ensures the title company isn’t charging an exorbitant amount for a standard title search.   

How to Get a Title Search Done

In most cases, the title company handling your real estate transaction will handle the title search. They have the technology to pull records quickly and from multiple sources. These professionals also handle title searches regularly, which means they can get the documents they need and send them to your real estate agent for review. Once the property title searches are complete, your agent should walk you through the results and discuss any issues.

If you are unable to work with a title company, you can hire a real estate attorney to complete this process. They should be familiar with title searches and how to gather a comprehensive report fairly quickly. Keep in mind that unless you already hired an attorney to support you during this transaction, you may need to pay their hourly legal fees for assembling this report.

A final option is to do your own title search. You can visit the property records office and search for your home using the street name and address. You can learn about the property’s ownership history and any issues there have been with transferring the deed. A lot of this property information can be found through an online search, but you may need to visit physical office locations as well.

Conducting a thorough title search on your own doesn’t necessarily save money and it definitely doesn’t save time. Instead of paying a one-time title search fee, you will need to pay multiple records offices to pull information on your home.

This entire process could take several days as individual offices get back to you. Many people opt for the title search cost from the representing company instead of doing their own research once they realize how arduous this project really is.

What Happens if the Title Search Finds Issues?

If the title search comes back with any issues, it is known as a “dirty title.” The title company will alert the buyer to the problem and how the problems could affect the closing process. Many issues need to be resolved before a title company will move forward with the home sale. 

When faced with a dirty title, the buyer should bring the issue to the seller. There are three ways to move forward from here: 

• Resolution: The buyer asks the seller to resolve the issue. The seller either has until the closing date to present a clean title to the buyer or they may need to delay the closing appointment. If the closing is delayed, the buyer might ask for compensation for any costs accrued because of the issue.  
• Compensation: The buyer asks the seller to compensate them for the issue. This is an option if the title company says a deal can move forward without clearing the title. The buyer will then work to clear the title after they take control of the property.  
• Retraction: The buyer walks away from the deal. If the issue is severe or the seller refuses to do anything about the dirty title, the buyer can cancel the contract and look for another home. 

While some sellers may be difficult to work with, it is in their best interest to work with buyers to clear any title issues. The same problem will arise with the next buyer if the current one walks away. Your real estate agent should make it clear that it is the seller’s responsibility to address any title issues or compensate the buyer for taking them on.   

The Importance of Title Insurance

When you buy your house, you have the option to purchase title insurance to protect your property. Title insurance is a one-time fee that protects your title as long as you live there. If you think you bought a house with a clean title but issues are discovered in the future, title insurance will protect you from taking on the financial burden of remediating them.

Here are a few potential issues that title insurance protects you from: 

• Forged documents and falsified claims. 
• Incorrect or invalid signatures on documents.
• Ownership claims by another party. 
• Unrecorded easements. 
• Undisclosed judgments against the property. 

For example, if you discover unpaid property taxes after you close, the title insurance would prevent you from taking on the tax debt. If you learn that the ownership documents were forged and the seller does not own the property, the title insurance can save you from significant costs while the deed is contested.  

A title insurance premium usually costs between $500 to $3,500, depending on the purchase price of your home, the state where you live, and the insurance provider. Your title company will likely have a preferred insurance provider they recommend working with and can work with your real estate agent to set up a title insurance policy.

Hire an Experienced Agent to Start the Buying Process

Title searches are a common part of the buying process. While most title companies go through this process automatically, it helps to have a trusted real estate agent confirm that the title search occurred and walk you through the report. Your Realtor will also be your advocate if there is a dirty title that the seller needs to clear. 

To find a real estate agent in your area, turn to FastExpert. You can read agent profiles and find qualified candidates to represent you. You don’t need to be an expert in real estate with a trusted agent by your side. Try FastExpert today and hire a Realtor who can get you a thorough title search.