If you are buying a home, you must consider the chain of title. Chain of Title is a history of the property; it shows all the owners and transfers. A title report details the history of a property. It will show sales and transfers, as well as liens. Liens can be on any property, and they represent monies owed to a person or entity.
Have your real estate broker order a title report from escrow once you decide to purchase a property. The title report will make sure you are aware of any hidden things or clouds on title. In addition to the liens, title will show easements that may exist. You could buy a property and only afterwards find out that the neighbor that lives behind you has a right of way easement over your property to get to theirs. Or even worse, you can find out that the person you think you are buying the property from doesn’t even own it.
In addition to ordering a title report, get title insurance on your transaction. Yes you have to pay for it and yes it’s worth it. This will help protect you against fraud as well as hidden liens or easements on title. Title insurance is a standard cost and is based on the purchase price. Depending on purchase price, title insurance policies can cost anywhere from $500 for a property under $100,000 to several thousand when a purchase price is in the millions.
Make sure you speak with your broker, escrow officer or title officer to discuss different policies. Different types of policies, just like other types of insurance, cover or exclude different things.
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