You’ve sold a house. The buyer and seller have agreed on a price. The mortgage has been approved. You probably already have the title commitment, which shows the results of the title search and examination, but in some cases you may not. There are some situations when title searches may seem to take longer than usual, and you may wonder what the title agent is really looking for anyway.

In a perfect world, a chain of title to a property would start with a valid grant from the sovereign state and continue in an unbroken line of conveyances through to your transaction. But as we all know, this isn’t a perfect world, and when it comes to real estate, as with anything else, sometimes defects are found. When it comes to property title, those mistakes can be anything from missing documents, to those that are poorly drawn or forged. Any one of those defects can threaten your buyer’s financial interest in her home.

It is a title agent’s responsibility to identify as many defects as possible, so your purchaser acquires good title, lessening the risk that she will have claims filed against the property. Title companies insure that the purchaser receives good and marketable title. The owner’s policy also insures against off-record matters such as fraud and forgery. Therefore, it is of primary importance that they carefully and thoroughly search the title to a property and examine all the documents that affect the title to the property. Without careful searches and examinations of title, our real estate system would be besieged with claims.

Examiners look at leases, taxes, judgments, guardianship matters and titles derived through a divorce – any and all paperwork related to property ownership. Sometimes they must unsnarl complicated wills and figure out difficult inheritance situations. Other times they may be confronted with two chains of title for the same property. National figures reveal that one out of every four residential transactions require “curative action” to resolve problems prior to closing.

Once the examination is complete, the company can underwrite the title insurance policy. Title insurance underwriting is different from underwriting auto or homeowner’s policies, where there are lots of statistics and models for assuming risk. Because each property has its own unique history, each property is underwritten separately. Rest assured, though, that when the policy is delivered, it is tailored to your buyer’s property, and is based on the most thorough review possible of property documents and related issues.

A title search, then, is like a background check for your buyer’s property. It reveals any issues of record that could be problematic and either corrects them or assumes the risk of them, so your buyer gets property that is in the best possible condition. So while you and your buyer may be eager to close quickly, know that a small investment of time now can save money and heartache later.

Published: August 14, 2002

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Ginny Abiassi is Senior Vice President, Director of Communications, and Senior Underwriting Counsel for Stewart Title Guaranty Company, a subsidiary of Stewart Information Services Corp. (NYSE: STC). She heads Stewart’s national marketing program, oversees six company websites and is a frequent lecturer on real estate, real estate law and title insurance topics. She is the co-developer of Stewart's award-winning Virtual Underwriter software, as well as the creator of REprofile.com, the website that profiles the latest news, legislation and court decisions in the areas of real estate, finance and title insurance. Stewart Information Services Corp. is a global real estate information company, providing title insurance and related information services through more than 5,900 issuing locations in the United States and several international markets. Stewart meets the needs of real estate agents and mortgage lenders through the delivery of information services required for settlement using e-commerce. For more information visit www.stewart.com or contact solutions@stewart.com.