Title Check

[Anonymous]

Excuse my ignorance, what is it?  What does the process consist of?

[DallasLoanGuy]

reasearching public records for potentialliens against th property. like if the owner got roofing work done and stiffed the roofer.... the roofer might put a lien on the house.

lender wants clear title or no loan.

also, they fo social security nuber search on the borrower to make sure there are no judgments the borrower 'forgot' about.

[Anonymous]

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@DallasLoanGuy wrote:

reasearching public records for potentialliens against th property. like if the owner got roofing work done and stiffed the roofer.... the roofer might put a lien on the house.

lender wants clear title or no loan.

also, they fo social security nuber search on the borrower to make sure there are no judgments the borrower 'forgot' about.

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Gotcha.  But why doesnt the LO check all this when doing the approval?  I mean against the borrower.  How would a borrower check their own status to make sure there are no "mistakes" that can and will haunt them?

[MattH]

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@Anonymous wrote:

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@DallasLoanGuy wrote:

reasearching public records for potentialliens against th property. like if the owner got roofing work done and stiffed the roofer.... the roofer might put a lien on the house.

lender wants clear title or no loan.

also, they fo social security nuber search on the borrower to make sure there are no judgments the borrower 'forgot' about.

---

Gotcha.  But why doesnt the LO check all this when doing the approval?  I mean against the borrower.  How would a borrower check their own status to make sure there are no "mistakes" that can and will haunt them?

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Loan officers cannot readily do title checks, nor can ordinary indivividuals.  People who specialize in such work physically go to the appropriate office and wade through a Byzantine labyrinth of public records looking for liens, easements, zoning issues, and a bazillion other encumbrances.  Details vary enormously from State to State, the records might be in a State office, or a County office, or a local government office.  Title Searching is an extremely specialized task, even most Real Estate lawyers will call upon specialists for this task.  There is nothing to prevent you from going to the appropriate office and wading through the records, but you would need to be extremely knowledgeable to avoid missing some trap buried in the fine print of that 1943 deed of sale or whatever.

Title Insurance is virtually unique among types of insurance in that most of the company's cost of doing business is NOT paying claims (they pay claims extremely rarely), most of their operating cost is the cost of doing their own title searches before they issue each policy.  The real value to the lender of such a policy is not the prospect of having to file a claim, it is the assurance that comes from a title insurance company being willing to issue a policy.

Incidentally, Title Insurance is virtually unique to the US among rich countries.  Most developed countries have a central land registration system run by the government, and once they say a buyer has title it is virtually impossible for any claimant to come out of the woodwork.  In the US we have extremely backward title laws, in large part because they are matters of State Law not Federal Law and each State is different but in just about all of them Real Estate Law is very very murky.

Here's an example from a recent court case of just how murky title insurance issues can get:

http://www.ca3.uscourts.gov/opinarch/062890p.pdf

Message Edited by MattH on 08-31-2009 10:19 PM

[DallasLoanGuy]

what matt said.

preapproval is also subject to YOU getting a clear ss# check and it is subject to the PROPERTY getting clear title.

this isn't to scare you.

it is to educate

[Anonymous]

wow, lots to learn here. i have heard that title sometimes search for one state lien only. i had a judgment wich expired 3 years ago, i went a head and paid.

[MattH]

When I was a kid my parents had a major headache when they wanted to get a building permit to fix their garage: it turned out the structure had been built too close to the property line in the 1920s so they had to get a zoning variance.  Big fun, involving multiple trips to the Village Hall. Fortunately, the neighbor on that side was a good friend and happy to sign a document saying he had no objection to the presence of a garage encroaching on his property (as it had been there longer than he had been alive). But that's the thing about property title and zoning issues: mistakes that were made decades ago can lead to surprises in the present. It's even worse in the UK: recently I read a news item about how a rural Anglican Parish is using an obscure provision of the law dating from feudal times or somesuch to force nearby landowners to pay for repairs to church buildings.

Message Edited by MattH on 09-01-2009 07:21 AM

[Anonymous]

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@DallasLoanGuy wrote:

what matt said.

preapproval is also subject to YOU getting a clear ss# check and it is subject to the PROPERTY getting clear title.

this isn't to scare you.

it is to educate

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Ok ,I guess I am confused.  On the credit report there is a section for public records on me.  Is this different from the process in a title check?

[MattH]

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@Anonymous wrote:

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@DallasLoanGuy wrote:

what matt said.

preapproval is also subject to YOU getting a clear ss# check and it is subject to the PROPERTY getting clear title.

this isn't to scare you.

it is to educate

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Ok ,I guess I am confused.  On the credit report there is a section for public records on me.  Is this different from the process in a title check?

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These are two entirely different types of public records.  The public records section on your credit history lists stuff like liens and judgements against you as an individual if you've been sued and lost, or whatever.  The public records being searched for a title check are about the real estate you are planning to buy, so they include all deeds of sale, mortgages, mechanics liens, easements, and so forth on that property for as far as records go back; in some cases those records might go back for centuries.  If you have never been sued there may not be any items in the public records section on your credit history, but for any real estate there will should be public records of its ownership history.

Also, the public records section of a credit report only lists items relevant to credit; for instance a marriage or divorce creates a public record but those sorts of public records won't appear in a credit history.