Tag Archives: title search

Important Elements Of Commercial Property Title That You Need To Know

In theory, a commercial property title search would run exactly the same way as a residential property. The records are generally in the same location and the logic behind running a search is the same in the sense that the same deed books and files are being examined. However, there are a couple differences to be aware of.

First of all, there may be UCC filings on a commercial property to be conscious of, which are less likely in a residential property. A UCC filing governs commercial transactions and essentially states that an individual claims an interest in someone else’s property, typically as collateral for a debt. These are filed in the Secretary of State’s office which allows the creditor to have a security interest in the debtor’s personal property. There could also be leasehold interests, which are created by a written lease and gives someone the possession and use of a property for a stated period of time.

A name frequency factor could also exist. Normally, the name on a commercial property is a corporate entity, not an individual. Now, this corporate entity may have several variations of the name. Sometimes it may be listed as Inc., while other times it may be written out as incorporated. There could also be abbreviations of that corporation. In some cases, a parent and subsidiary corporation could own the building and operate the business. Thus, with all of these variations, making sure that the correct records are analyzed for that title search is an important part in making sure a commercial property title search is performed correctly.

In addition, there can be records on a commercial property which normally aren’t seen on a residential property. For instance, blanket mortgages that cover all properties that a particular entity may own. There may also be common deeds between multiple parcels at that commercial location. For example, a house is normally only a half-acre or less with a single building or structure on it. A commercial property may be larger in size, have more complex ownership, or have multiple complex structures on that parcel. In addition, there may be a variation of names on the tax assessor versus the ownership. In many cases, a commercial property owner will have a tax preparer or agent handle their real estate tax payments for them, whose name is then on the tax assessor’s site. Therefore, a person listed on the tax assessor is not necessarily the owner; they may simply be an agent that handles paying the taxes.

Another variable that can be found with commercial real estate is a sale and leaseback. This occurs when an individual who owns a property sells it to a corporation and then leases it back to the entity that’s actually running the business in that location. When this occurs there can be clauses for the tenant which affects the property. There may be purchase option clauses or clauses to make sure that the property is maintained with certain zoning.

Lastly, a big factor in commercial property title search is the variation of types of property. For example, a single barber shop in a small building requires much less complex research than a mall that may have multiple parcels or the Empire State Building which may get into ground leases and air rights and all other types of factors.

So, when getting a title search on a commercial property, be sure to speak with a provider who has the experience, knowledge, and capability of performing the title search to the level that is needed for commercial property.

Title Insurance Policy: Coverage, Costs, & Current News

A title insurance policy is similar to other types of insurance policies you would buy, such as car insurance, homeowner’s insurance, or health insurance. They cover for risks, defects, or damages to something in the future, in this case the property title. A title insurance policy is a one-time premium that covers you as long as you own the property. The policy is sold by an insurer certifying that if a title issue arises on a property, they will pay to correct it or pay the maximum the policy was for. Title insurance does not guarantee repair of a title defect or cloud on title, but it does provide financial compensation for the policyholder if a defect is discovered in the future.

So what goes into a title insurance policy and what does it cover? First, a title search must be run on the property to search for existing liens, mortgages, encumbrances, or clouds. If any are found during that title search they will be excluded from coverage and be listed on page one of that title insurance policy. The title insurance policy would cover if something is hidden on the property, for example, a forged signature on a deed fifty years ago, or claims against the property that the title search missed.

After the initial title search is complete a few more reports are analyzed. Usually the title insurance company will require a property survey to find out where the boundaries of the property actually are. Next, a credit report on the current or prior owner will be run to make sure there are no pending judgments or pending lawsuits against the owner that could turn into a lien against that property. Depending on the property and the insurer, some other types of research might be done additionally; otherwise the insurer will complete the policy.

The turnaround time for a title insurance policy is typically around 30 days. This includes the time it takes to get the underwriting and background checking complete on that title insurance policy.

The cost for a title insurance policy varies. It is based on the purchase price of the property and it is based on whether or not the property is being financed. If the property is being financed it will most likely cost a little extra to cover the lender in addition to covering the owner. However, the cost is essentially based on the selling price of the property which is usually going to be a few hundred dollars per thousand. For example, if the property was $500,000 then the policy could be a $1,500 or $2,000 premium altogether. Yet, keep in mind that the title insurance company will probably want to do the closing for that transaction so you may also incur some closing costs or escrow fees on top of the title insurance policy.

When choosing a title insurance company and insurer, be sure to do your due diligence beforehand. There have been many cases of title insurance fraud in the United States. For example, the article by Moe Bedard titled FBI Charges Pennsylvania Lawyer in Title Insurance Fraud Scheme describes a case in which Susan Kevra-Shiner was recently charged for fraudulently offering title insurance policies to approximately 76 homeowners and/or lenders and receiving $72,000 from fraudulent title insurance premiums.

If you would like more information regarding title insurance policies, check out the following videos: What Goes Into a Title Insurance Policy, Title Search vs. Title Insurance, Insurance Underwriting Standards and Title Searches.

How to Choose Which Type of Title Search to Get

Do you need a title search but you’re not exactly sure which type to get? There are a couple different options as to how you can approach getting a real estate title search. You can have a professional examiner prepare a certified title abstract for you. You can do the search yourself. Or you can buy a basic electronic data report from an online website. So how do you decide which way to go?

First you need to ask yourself what the purpose of this search is. Do you need accurate, detailed information for a legal purpose or because you are considering buying a property, or do you simply want a title search done out of curiosity. Then, ask yourself if it is okay for the report to have some missing information. If you’re making a decision about a several hundred thousand dollar property, for example, you may want to make sure the due diligence is as complete as possible. Also, determine what your budget is for a title search because the prices vary.

When you know the answers to those questions, consider your main options:

Certified Title Search: A full certified title abstract prepared by an examiner will have the most complete and accurate information. However, it is the most expensive option and may cost up to several hundred dollars, depending on the type of property and search. Yet, you are getting what you pay for. If you need an extensive and precise title search, this is the way to go. All liens, mortgages, current property ownership information, tax assessors’ records, judgments and other encumbrances will be provided and copies of the official documents are available. For more information, read The Difference Between a Certified & Non-certified Title Search or What is a Title Search & Why do You Need One?
Basic Title Search Report: A basic report from online web-sites may not have as much information as a full certified title search, but it will be cheaper. For example, LienList.com offers a basic search for $69.00. It includes a legal description of the property, purchase mortgage data, liens, tax assessors’ records, and grantor/grantee listings for the current ownership.
Do It Yourself: If you do not want to spend money on a title search then you can do it yourself. However, it might take six or seven hours going through documents in various land records offices to do so. Most people who do a title search themselves will actually get about ninety percent accuracy. So, if there is no room for error on your title search you might want to hire a professional. If you still want to do your own title searching, spend the time learning how to do a search correctly, that way it’ll be close to what a professional title examiner would present to you on a certified title abstract. To learn more, read Do It Yourself Title Search.

Property Owners’ Frustrations with Mineral Rights Owners

West Texas oil well pumper and black brama cattle.

When mineral rights exist on a property there may be easements associated with those rights. For example, a mineral rights transfer often carries an easement with it to allow the grantee of those rights access to the property. It may allow the grantee to transgress across the property, to install a well or some sort of structure on the property, and to extract minerals from subsurface on the property. This may affect what the land owner can do to develop the property and it may affect any existing plants and agriculture on the land.

However, laws regarding mineral rights vary state to state. North Dakota, for example, allows the owner of surface rights to receive some compensation for damages done to their property by mineral rights owners, but the compensation does not cover lost farmland and disruption of normal farming and ranching practices. Jonathan Knutson explains, in his article North Dakota ranchers say mineral rights get too much emphasis, how Kim Shade, a rancher in North Dakota, estimates a $25,000 loss from oil vehicles killing cattle on his land and an additional loss of 15 calves who died from a chemical spill by an oil company, all of which are not covered by insurance. Other negative effects include harm done to crops from dust raised on unpaved roads by oil industry trucks and poorly sited oil wells which create sections of land that are too small to farm with modern equipment.

In Texas, mineral rights supersede property rights; therefore, oil companies who own the mineral rights to a property can come onto privately-owned property and start operations. When this occurs land owners are paid a leasing fee from the mineral rights owner. Yet, property owners in Texas are also having issues with mineral rights owners starting drilling operations on their property. Joshua Brown discusses the frustrations of an upset Texas property owner in his article Home (and oil) on the Range. Aside from the unpleasant aesthetics, some of the problems faced by the property owner include a huge tree dying from nearby oil drilling, a smelly retention pool filled with water and oil runoff, and fumes created by flare stacks that accompany each well.

If you own a property, it is advised to review the mineral rights deed associated with the property. Don’t just look at who the owners are of those rights but get a thorough mineral rights title search. This will help you understand the easements associated with it and what rights have been given up in addition to the access of minerals from subsurface on the property.

The Difference Between a Certified & Non-certified Title Search

A title search can mean different things to different people. One way to insure that the report you get as a “title search” answers all your questions and provides the necessary information you require is to get what is called a Certified Title Search. This means that the search is done to certain standards, that all the procedures are followed, and all of the places where potential clouds on the title might appear are checked when the title search is prepared.

Essentially, anybody can do a non-certified title search. If an individual goes to the land records office, visits all four or five of the offices, pulls all the necessary documents to review and reads through them to create a summarized report, you can call that a title search. Even if it is hand written on a piece of paper, you could name that a title search and some people might even be willing to pay for that and call it a title search. However, it would not be an official certified title search.

A certified title search is a research project performed by a NALTEA (National Association of Land Title Examiners & Abstractors) certified title abstractor or title examiner. These certified examiners and abstractors will do all the necessary research according to certain industry standards. To be a NALTEA member an individual must pass a rigorous exam, demonstrate that they have experience in the industry, and continue their education every year by showing that they have attended training or other industry events to show that their knowledge is improving. These certified examiners are qualified and trained to know what to look for, to make sure all liens and encumbrances on a property are found and that all sources are checked. The format of a certified report also meets certain obligations that will hold up in a court of law, if need be.

Understanding Mechanic’s Liens

A mechanic’s lien is a very particular type of encumbrance on a property that’s afforded credit and protection for a contractor or other builder that’s done work on the property. It is a process enacted usually by statute in a state where it protects contractors or builders for doing work on a property when they don’t get paid for it.

In many states a mechanic’s lien doesn’t even need to be filed as an official document in order to protect the general contractor. For example, if a contractor installs a new roof on a house and the property owner doesn’t pay the bill, a mechanic’s lien is in place even before any paperwork is filed. The person who completed the work on the property is thus covered for any forgone payment of their services.

Additionally, many states extend protection to subcontractors or companies that have delivered materials or provided labor to a project even if it was managed by a general contractor. If a property owner pays a general contractor for work done to their property and the general contractor doesn’t pay any subcontractors, even though the general contractor was paid in full by the property owner, that property may be encumbered by a lien placed by a subcontractor who didn’t get paid for his work.

However, this is not always the case; mechanic’s liens vary due to state laws. For example, in California there are certain filings that must be made for a mechanic’s lien to be valid. A subcontractor that wants to assert a mechanic’s lien must have previously served the owner, and original contractor or construction lender if necessary, with a “preliminary 20-day notice” stating what is being done on the property. Failure to properly serve a 20-day notice essentially renders any mechanic’s lien invalid. Once the project is complete contractors and subcontractors only have 90 days to file a mechanics lien. However, there are a couple exceptions to that 90 days rule. For instance, if the property owner files a Notice of Completion within 10 days of the project being finished it will shorten the time for a mechanics lien to be filed by a general contractor to 60 days and 30 days for subcontractors.

If you are a property owner and are doing any sort of remodeling, be sure to check what the laws are for mechanic’s liens in that state. In addition, if you are purchasing a property in a state which doesn’t require mechanic’s liens to be filed, you should see what work has been done on that property recently, make sure all contractors and subcontractors were paid and that no mechanic’s liens are in place. A standard title search on a property would indicate if there is a mechanic’s lien placed on the property, along with identifying any other current liens.

Tips for Getting the Best Value on Foreclosures

Although foreclosures have seen a recent dip in the market, a valuable return can still be made when investing in them and those interested in purchasing foreclosures should know the smart way to buy them. Whether you are buying a foreclosed house for your personal use or as a real estate investment you should know how to get the best value for the property. There are typically three stages at which one can buy a property during the foreclosure process. The first stage is known as a pre-foreclosure. This is when an individual can buy a property before the foreclosure is officially finalized and the homeowner is forced out. The second option is buying at a public auction. At this stage of the foreclosure the property has been sent to the county where a neutral third party, such as a trustee, will carry out the public auction. The third option is to buy post foreclosure. This occurs when there is not a higher bid than the default amount during the auction so the property is acquired by a lender. If a bank takes the property to resell they will list it with a real estate agency, this is then known as an REO, or Real Estate Owned.

Now, here are a few simple tips for getting the best value for a house during the foreclosure process.

ADDED RISK IF PROPERTY HAS NOT BEEN SEEN

A property is still owned by the homeowner up until the point of auction. Thus, when biding on a foreclosure at auction, you typically cannot go inside the house to examine its’ condition. This can potentially be an added risk. Owners who have had their houses foreclosed couldn’t keep up with their payments so they most likely couldn’t afford to upkeep their home. A foreclosed house can have severe water damage, ripped out carpeting, holes in the walls, or be stripped of kitchen appliances. These, and any other unexpected expense, are now costs the new homeowner will have to incur. Therefore, unless you have had the opportunity to see the interior of the home, it is advised that you set your maximum bid amount based on the assumption that there is damage that will need to repaired.

FIND OUT IF THERE ARE ANY LIENS ON THE PROPERTY

When buying a foreclosure, unexpected liens can arise that are not recorded or that you simply are not aware of. The easiest and safest way to be sure if there are liens on a property is to contact a title search company to perform a title search on the property for you. Another option would be to do some investigating of your own by reviewing the property records at the county recorder, clerk, or assessor’s office. Often time’s real estate agents are not fully aware of all liens so you should be sure to check, whether it be through a professional title abstractor or done yourself, before buying a home. To learn which liens are often unknown to real estate agents watch this short video, 8 Most Common Hidden Liens on a Property. If you are going to perform the liens search on your own check out this short tutorial for details, How to Search For Free Lien Records for Real Estate.

ESTIMATE REPAIR COSTS

Foreclosures tend to require extensive renovation and are generally sold as is so you should not expect a discount for repairs. Before purchasing a foreclosed home, it is a good idea to hire a home inspector to estimate the costs required for the repairs. Keep the estimated costs you receive from the inspector in mind and even add an extra 10% to your repair budget. This will help you stay closely within your overall budget. Again, this is not always possible for a home in foreclosure and your maximum bid should reflect your ability to bear this risk.

KNOW THE SALES PRICES OF COMPARABLE HOUSES IN THE AREA

When purchasing any real estate you should look at comparable properties, aka comps, and their recent sales prices. Robert Jenson, owner and founder of the Jenson Group at RE/MAX Central in Las Vegas says people really have to look at the comps in today’s current market conditions and write a competitive offer based on that. Sometimes the bank prices the homes really low, and the home will have multiple offers over list price within hours. Sometimes it’s priced too high, and you can come in lower. A lot of times, buyers will come to me and say, ‘We want to write offers for half price.’ It just doesn’t work that way." By researching what similar homes are selling for at market value, you will be able to establish an accurate range of prices to base an offer or bid on.

What Is A Title Search And Why Do You Need One?

A Title Search is conducted for many reasons. The most common is before the transfer of ownership interest from one party to another or simply put, “before it is sold”. If the buyer is securing financing for the purchase, the lending institution usually requires proof of ownership of the seller and their right to transfer interest as well as to ensure that there are no outstanding liens or encumbrances on the property that may be associated with the subject property. In some instances a lender may want to use this information for title insurance, thus adding a high level of security to the lenders investment.

Experienced investors routinely obtain title search reports. One of the biggest mistakes commonly made by a novice investor, is the failure to obtain a Certified Title Report prior to a sale or auction Sean O’Toole, founder and chief executive of ForeclsoureRadar.com says on MSN.COM that a title search is your best chance of success and that “the title search is must.”

Litigation and property rights are other important reasons to obtain a title report. For example: What do you do if your home is being wrongfully foreclosed? How do you resolve an ownership dispute? Does someone else have the mineral rights to your land? Do you suspect you inherited land from a deceased family member, but you can’t prove it? What if you are being audited by the IRS or other government agency? Did you re-invest your capital gains into a piece of real estate in accordance with the law? How do you prove that you did?

The bottom line is, if you are buying, selling, financing, litigating or investing in a piece of real estate, it is part of your due diligence to obtain an official title report.

What is a title search?

1. A title search is a process of determining who, from the official public land records, has the legal right of ownership to the subject property. The answer can be as simple as a single person owning a house or as complicated as multinational corporations owning fractions of interest that may contain mineral rights, easements, contractual covenants, obligations and rights of survivor ship.

2. There are two typical types of searches. A Current Owner Search and a Chain of Title. A chain of title search is just what it sounds like. It is the historical record of ownership from one party to another up until the present time. A chain of title is usually for a specific period of time and is often used for mineral rights, litigation, title insurance and historical research. A current ownership search looks at the subject property starting from when the current owner first took possession of the property. This could be 2 weeks ago, or 2 centuries. It is like a snapshot in time of the financial and legal standing of that property as it currently exists.

3. A title search can show you if there are any open liens, mortgages, and deeds of trust or even other owners. This information can be critical to determine who is needed in order to legally transfer the ownership to another party

4. In addition to all of this, the title search provides the present status of real estate taxes and other municipal charges that may be due and payable from previous years.

5. A quality title search will also contain a judgment search. This is performed to determine whether there are any unsatisfied judgments, federal or state income tax liens, mechanic’s liens, bankruptcy or other judgments against the seller or prior owners that attached to the property.

6. Some title search services may provide a list of “Comps”. This type of information generally shows the buying and selling history of similar properties in the local neighborhood. This information is important for home buyers, investors and developers.

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