A title search or title examination is the real estate record search process that attempts to identify legal interests to a parcel of land. The most important reason to conduct a title search is first to identify the legal owners of the subject property. The secondary objective is to identify matters that will continue to affect the property after closing, such as restrictive covenants, rights of way, easements, and boundary line agreements, among others. Finally, the title examination attempts to identify liens, which much be satisfied at or before closing, as well as encumbrances or defects that must also be addressed.
Residential Title Insurance
Even though a thorough title search is performed, the Title Insurance Policy protects against hidden defects which do not show up on the title search. Lender’s Title Insurance only protects the lender, and is almost always required by the lending company, whether the transaction is the original purchase of the property or a subsequent refinance. The purchase of the policy is part of customary closing costs. Owner’s Title Insurance protects the owner. This policy should be issued when the property is purchased. The Owner must decide to buy the Owner’s Title Insurance Policy – it is not an automatic part of the loan closing process.
Commercial Title Insurance
Commercial real estate transactions typically involve far more complicated titles, even though a commercial property title insurance policy covers many of the same issues as residential property title insurance. There may be exceptions specific to the property itself such as easements and rights of way issues, or zoning, building or environmental violations from previous owners. That’s why commercial transactions often involve a property survey and/or the business’s attorney or legal counsel reviewing the title commitment prior to closing. Such steps and review often result in commercial property owners electing to extend the coverage.
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