You’ve in the process of buying a home, and just received a discouraging call from your realtor.
“I’m so sorry to be the one to tell you this,” the agent apologizes, “but that home you’ve made an offer on is not eligible for purchase. It appears it’s been tangled up in probate court for years over an inheritance dispute, and there’s no clear ending in sight. The current residents in the home were not allowed to list it for sale, and a family feud has erupted as a result.”
Stunned, you ended the call and just stared, mouth agape, at the phone in your hand. Disappointment and relief commingle, as you believed that house had been perfect for your family… well, almost perfect, but wow, did you dodge a bullet by learning this information before going to the closing table!
How did real estate agents get this information? She enlisted the services of Trustworthy Title to conduct a title search and discover the ownership history of the home, as well as its eligibility for sale.
What Is the Purpose of a Title?
Investopedia defines a title as, “a document that “shows the legal ownership of a property or asset.”
While we most often think of titles in relation to houses, and indeed this is perhaps where they are most commonly used, they can also be applied to trademarks, businesses, boats, cars, and other assets. The title can also name who has rights to resources, such as oil or mineral rights.
Personal property titles include both tangible assets, such as art, jewelry, and even pets or houses and intangible items, such as stocks, patents, and copyrights. Personal property titles are good for items that don’t fall into the “real property” category.
Real property titles show ownership and whenever a car, house, business, or the like is sold, the title is transferred to the new owner. The transaction cannot take place if there is a lien against the property.
What Kinds of Title Might I Encounter in Real Estate?
Several different real estate titles define the various ways people can own property.
- Community property is shared by a married couple, with each owning half. Both have the right to will their share of the property to whomever they choose or leave it to their heir of choice.
- Tenancy in common, like community property, is owned by multiple people, but each one holds a separate title for their portion of it and retains the freedom to do with their part as they choose.
- Sole ownership, as the name suggests, includes properties with only one owner, whether the owner is single or married.
- Joint tenancy properties are shared equally among two or more individuals as long as they live.
- Tenants by entirety are a title structure for legally married couples, with the pair viewed as an individual. Should one spouse die, the full ownership is transferred to the surviving partner.
What Information Does a Title Provide?
A title shows the current ownership and the ownership history of a property. It is also used to reveal whether a property is legally eligible for a sale or not.
What Happens if Property Has a Lien Against It?
A lien against a property is simply an unresolved financial issue. A lien, or “hold” on a property’s sale or transferability can be placed when the property owner has unpaid taxes or loans. Home loans automatically come with liens on the property you’re purchasing, ensuring that the lender will receive his money back before you sell. These liens are automatically removed when the loan has been repaid.
Liens can also enable creditors to collect the property if you’ve used it as collateral in the event of failure to repay debts. These can be placed against property by court order to pressure the debtor to make good on financial obligations which have been heretofore neglected.
Liens can result in the seizure of your property, as failure to pay gives the creditor the right to seize your assets. Federal and state debts, such as taxes, are paid first, and then other debts are likewise settled by the sale of the seized assets.
What Role Does a Title Company Play?
A title company, such as Trustworthy Title, is an independent entity whose roles include researching titles of properties being sold, providing title insurance, preparing title transfers, and preparing documents for closing. All facets related to the legal transfer of property ownership from seller to buyer fall under the jurisdiction of the title company.
With so much at stake in a real estate transaction, failure to investigate a title and neglecting to purchase title insurance to protect your purchase from an unforeseen issue well after the closing date can be devastating. You can’t afford not to have a knowledgeable title company working on your behalf to make sure the transfer is smooth and legal.
Trustworthy Title has been working with families and real estate investors in Omaha for twenty years, where we help them protect their greatest assets and make property transactions as smooth and painless as possible. If you’re in the market to buy or sell a home, we’d love to assist you as well. Give us a call today!