Doing your ownTitle Search - NOT brain surgery - Posted by John Behle
Posted by John Behle on March 27, 2006 at 18:01:28:
It is fairly simple to do a title search and it DOES make good sense to check titles before spending money on a deal.
It can range from just a quick trip to the recorder’s office to one simple button click on a computer. Let’s look at the worst case scenario which is doing your own work at the recorder’s office.
You do an “Abstract of Title”. It’s simple. You start with the latest document and just work backwards. You don’t necessarily need to go back to the Louisianna Purchase, maybe just a few years. You may only need to go back to the last time the property was sold and a new loan was put on by a conventional lender. At that time, there would have been a policy of title insurance.
You’re just looking for errors. You’re looking for things that are going to make th property unsaleable or difficult to buy and close. You want to identify problems before you waste time and money.
Once you pull the documents, you put the puzzle pieces together. You see where a loan was created, then paid off and released. You see where the current owner took title and can trace it back as far as you want. You see any outstanding liens, or whether the property has been in foreclosure before or is currently in foreclosure. It can be done in a few minutes and can prevent a waste of time and money if there are problems. It can also give you an edge. You find out a seller that acts like they are not motivated is going to lose their property to foreclosure in a couple weeks. You find a seller trying to mis-represent the number or amount of loans. You find problems that need to be fixed before the deal closes. Way too many times the “professionals” don’t find them or find them too late and a deal dies because of it.
Other times a title company will run a free PR or “Preliminary Title Report”. They may do a quick search - without the insurance. Some will do it for free. Others will do it cheaply. Some will let you use their computers or “title plant” which may consist of microfiche in their basement that mirrors what you would find at the country recorders.
A friend of mine had a good contact with a lady that worked at a County Recorder’s office. For ten bucks she would do a title search for him at her break or on her lunch hour. If you end up checking many titles, you can train an assistant to do it very easily. I had one of my assistants that worked all day long right in the same area of the recorder’s office as the title company researchers. I used to take people at my bootcamps down to the recorder’s office and we would search the titles of notes we were looking at together. It can be fairly simple.
Now, on the other end of the scale, more and more county recorder’s offices are getting good information available to the public on computers. One of my local ones has a simple button titled “ABSTRACT” and one click and I have an abstract in front of me. Seconds to know all I need to know about the title.
Now, that is just preliminary. I would never suggest you rely on it forever. It is a title report for free before expendind the NECESSARY money for title insurance later. At times in buying a note I do not get title insurance, but I do not recommend it for others. Most of the time, I do get insurance though and it is unwise to take that risk without extensive knowledge.
But, time and time again I have been aided by doing a quick title search. I’ve dropped deals that I find were mis-represented. I’ve solved complex problems that a title company might not have tackled or would have taken too long to do. I’ve weeded out sneaky sellers and problem properties. I’ve discovered seller’s true motivation and made better deals. I’ve found private loans and liens that I’ve discounted for extra profit or just to pull the deal together.
I’ve also weeded out snakes and scams. Having an “Abstract” gives a great deal more information than what you get from a title company. The sad news is most title companies do not even remember what an abstract is and it can be hard to get one through them.
It’s a valuable process to learn and can save time, money and deals. But, again, it is only preliminary and title insurance is necessary for protection.