When a sales contract is fully executed between a buyer and seller, a real estate attorney or title company will perform a title search. This is the process where recorded documents that may affect the title to real property are examined for encumbrances and liens, and other real estate interests and their priority for each parcel of land within the county.
Title records are maintained by recorders of deeds, county clerks, collectors and clerks of court, and include written documents, such as deeds and mortgages and other records, such as tax, marriage, and probate records, and judgments, that may affect the title of a property.
Recording is the deposition of written documents pertaining to a parcel of land in the public records, which in most cases, is in the courthouse of the county in which the real estate is located. The details of recording are stipulated by state law. Generally, any document that affects either the title or the interests in the land may be recorded. Any liens are generally given priority by their date of filing, with earlier liens having higher priority than later recorded liens. However, tax liens have higher priority over all other liens regardless of when they were recorded or even if they are recorded. Real estate interests also have a priority order, with earlier recorded interests taking priority over later ones.
Before a document can be recorded, it must satisfy the requirements of the recording laws of the state in which the property is located. Some states require witnesses, or that names be printed below the signatures and notarized.
The title record serves as a central repository of information about a parcel of land. Hence, anyone who has an interest in a property or wants to record a lien is expected to file a notice of it in the records, and anyone considering a future interest in the property, such as a buyer or lender, is presumed to know what can be found in the title records and by inspecting the property. Constructive notice is the legal presumption that anything recorded in a public record can be known by anyone who wants to know it. In real estate, constructive notice is also anything that can be learned by inspection of the property.
Not all liens are recorded. Statutory liens, such as inheritance taxes and corporate franchise taxes, are not recorded. Real estate taxes and special assessments, which are taxes assessed to pay for a public improvement that benefits the property, are not recorded until well after payment was due. Information about these off the record liens must be obtained from the municipalities, or receipts may be available to show that the real estate taxes were paid.
A title search is a search of all title records of a particular property to ascertain if the current title is good. The chain of title is examined from the root of title, which is the first record of the chain stipulated by state law that must be considered up to the present title. Many states have adopted the Marketable Title Act, which requires that the chain be complete only back to 40 to 60 years, depending on the particular state law. The marketable title act serves as a statute of limitations for potential claimants.
Most real estate sales contracts stipulate that the seller is conveying a marketable title to the buyer. A marketable title is one that has no defects in the title record and is not contingent on dubious law or facts. Other qualities of a marketable title are that it will not give rise to litigation and interfere with the buyer's enjoyment of the property, and that the buyer will have no problem selling the property in the future.
A certificate of title is an opinion by a title company, licensed abstractor, or an attorney that the title is good on a specific date based on the information in the title record and other public documents. Title insurance is purchased to protect against hidden defects. Most policies do not cover any defects or liens that are known to the buyer nor do they cover any changes in zoning or other actions by the government, such as condemnations. Now you have a better understanding of the title process.
Mario D'Artagnan is a broker associate with Realty World Florida, Inc. He is a former investigator for the Florida Real Estate Commission. He is also a former real estate instructor. He is a published author and has been a keynote speaker on the subject of agency law. He is also a veteran of the U.S. Air Force. For questions or comments contact . D'Artagnan at: email@example.com or call 239-565-4445.