Buying a house in Kentucky can be a huge life milestone. You have every right to be as excited as you are. At the same time, it can also be an intimidating experience. There are many steps involved. A realtor helps you find available properties. You take steps to secure a mortgage. You put in an offer when you find a home you like. Then, you need to conduct a property title search.
Property title searches are part of the standard home buying process, along with inspections and appraisals. Read on to learn more about property title searches in Kentucky, how they work, and how to protect yourself from surprises.
Property Title Search Basics
In short, a property title search looks up a given property's public records. It looks into the history of that piece of real estate. Who currently holds the deed? Does that person have the legal right to sell this property? Are there any liens against it? Examples of liens might come from unpaid taxes or an outstanding mortgage.
A home inspection might reveal leaky pipes and hidden mold. A home appraisal might show that the property isn't worth the asking price. That can impact whether the lender will approve the requested mortgage amount. Getting a property title search done is part of your due diligence as a buyer. It can reveal issues or complications.
If you don't get a property title search, and there's a lien against the house, you could be on the hook for the bill as the new homeowner. You'd hope that the seller has full rights to sell the home and they're acting in good faith. You'd hope that the title is clear. Sadly, this isn't always the case. Property title searches can confirm the rightful legal owner and bring any claims or liens to light.
What Information Does a Property Title Search Contain?
What exactly does "public records" mean in this context? Is this information you can look up on the internet? Not exactly. Instead, a title search thoroughly examines city and county records for the property. These are usually official filings with the local government.
Examples of the types of documents you'll find as part of a property title search include:
- Deeds to the property
- Ownership history (to establish a chain of title)
- Current and past mortgages
- Tax records
- Outstanding debts, like unpaid HOA fees
- Past property surveys
- Easements, covenants, and restrictions
- Property boundaries
- Relevant wills and lawsuits
- Other liens and encumbrances
To complete this search, a real estate attorney will access a number of physical records and electronic databases. This is much more complete than a simple online search. The resulting abstract may include any and all of the information above.
It is possible to conduct a title search yourself, but it is not recommended. You would need to seek out the specific records at the county courthouse, recorder's office, county assessor office, and other locations. The average person does not know where to look for this information. They may not know how to interpret the legal documents either. It is best to leave this work to an experienced Central Kentucky real estate attorney.
When Does a Central Kentucky Real Estate Attorney Need to Perform a Title Search?
Usually, a buyer will request a property title search when closing a real estate deal. It is a standard part of a real estate transaction before the deed to the property can transfer from the seller to the buyer. That's because if the title search reveals an issue, the buyer and seller will have a chance to resolve it.
For example, say there is an outstanding mortgage. It is reasonable for the buyer to ask the seller to resolve that mortgage before the property changes hands. The seller needs to pay off the debt before they can transfer the title to the buyer. Then, the buyer can gain ownership of the property with a clear title.
Mortgage lenders generally require a property title search as part of their approval process.
Remember that the seller might not necessarily be acting in bad faith. They might not even know about an old claim against the title. Even so, the results of the property title search can give them a chance to resolve the issues. It also means the buyer can clearly understand easements, covenants, and other encumbrances.
How Long Do Property Title Searches Take?
There is no real set time frame for property title searches. They are as unique as the properties themselves. Older properties tend to take longer, as they have longer histories. As a result, they will have more documentation. And older documentation can sometimes be more difficult to find. Newer homes, by comparison, have shorter histories and fewer documents. So, a search on a newer house should take less time.
This can be complicated by the history of the property itself. If it has gone through more owners, if there have been more mortgages, if there have been more complications around easements and encroachments, these can all add time to the process. It takes time to get the documents. Then, it takes time to review and examine them.
On average, you can expect most property title searches to take up to two weeks. Some can take longer than that. Similarly, how much a title search costs can vary. If there are more documents to find and review, it will cost more.
What Is Property Title Insurance?
A thorough property title search is a vital part of a real estate transaction. It can reveal issues that should be resolved before ownership can transfer from seller to buyer. Even so, title defects can still surface at a later date. Property title insurance is designed to protect buyers and lenders from those kinds of situations.
To buy property title insurance, you must first complete a property title search. Lender insurance is valid until the mortgage is paid off. Buyer insurance covers for as long as the new owner keeps an interest in the property. Costs vary but are usually around 0.5% to 1.0% of the purchase price. This is a one-time fee. It is often included as part of the overall closing costs.