Whether you are purchasing your first or fifth home, the title exam is one of the most critical steps in ensuring your investment is protected and your closing goes smoothly. It provides a reassuring layer of security, giving you the confidence that your investment is in safe hands.
So, what exactly is a title exam, and why is it such an integral part of the closing process? Understanding this process is crucial for potential homebuyers, as it ensures they are well-informed and prepared for their real estate transaction.
Understanding the Title Exam
A title exam, or title search, is the process of reviewing public records to determine the legal ownership of a property and to uncover any potential issues that may affect the transfer of ownership. This involves searching through various records, including deeds, mortgages, tax liens, court judgments, and other documents typically filed in county courthouses or public archives. The goal is to ensure that the seller has the legal right to sell the property and that no hidden claims or liens could complicate or block the transaction.
In Georgia, the title exam is conducted by a licensed real estate attorney, a unique feature that sets the state apart from others where title companies may handle the process. This expert examines the title and advises both parties on legal matters that could impact the property, providing a high level of guidance and support throughout the process, ensuring you are in safe hands.
The Importance of the Title Exam
The title exam safeguards both the buyer and the lender in a real estate transaction. Here’s why it’s so important:
Determining Dimensions, Boundaries and Land Size
While property surveys are generally not done for most subdivision lot closings, it is important to carefully compare the deeds to any recorded plats to make sure that the land conveyed is exactly what the buyer and seller each intended.
Verifying Ownership
The title exam ensures that the seller truly owns the property and has the legal right to sell it. Without this verification, you could end up in a situation where someone else has a claim to the property, putting your investment at risk. This could lead to legal disputes, financial losses, and even the loss of the property.
For example, a previous owner may not have been fully removed from the title, or the property could have been passed down through inheritance without proper documentation. These issues must be resolved before you can fully own the property.
Uncovering Liens or Encumbrances
One of the primary purposes of the title exam is to identify any liens, encumbrances, or outstanding debts associated with the property. Liens could be placed on the property for unpaid taxes, contractor fees, or even unpaid child support. If these issues are not discovered and addressed before closing, they could become your financial responsibility as the new owner.
By conducting a thorough title search, our team can ensure that any liens are cleared or satisfied, giving you peace of mind that no one will come knocking on your door demanding payment after you’ve moved in.
Identifying Easements or Restrictions
A title exam can also reveal easements or restrictions that affect how the property can be used. Easements may grant access to a utility company, neighbor, or local government, limiting how you can build or improve your land. Restrictions might dictate certain conditions, such as whether you can build a fence or what types of renovations are allowed.
Knowing about these restrictions beforehand allows you to make informed decisions about whether the property fits your needs and long-term plans.
Preventing Fraud
One of the key roles of a thorough title exam is to prevent fraud, a risk that unfortunately exists in real estate transactions. The exam helps identify issues such as forgery or fraudulent transfers, ensuring the sale is legitimate and protecting your interests, giving you a sense of security.
Title Insurance: An Added Layer of Protection
After the title exam is completed, title insurance is typically issued. This insurance protects you and your lender from any undiscovered issues with the title that may arise after closing. For example, if a long-lost heir suddenly appears and claims ownership of the property, or if a contractor places a lien on the property after the sale, title insurance would cover these costs. (Click here for an deeper guide on title insurance, how it differs from homeowners insurance and more.)
While the title exam is thorough, there’s always a small chance that a problem could be missed or that new issues could occur. Title insurance ensures that you won’t be financially responsible if that happens.
Remember, seeking professional assistance is crucial in ensuring a smooth and secure real estate transaction. If you have questions about the title exam or any other part of the closing process, please contact our office. With more than 30 years of experience in the real estate industry, we’re here to help you confidently navigate this important step.