Have you seen a lot of romantic comedies? If you have, then you’re definitely familiar with some of the tropes. You know: The meet-cute moment, the first conversation filled with witty banter, and, the one we’re going to focus on, the ending mad rush to stop a wedding mid-service.
While you’re watching these movies, it can be easy to get swept up in the moment, and cheer for our hero or heroine as they swoop in and get back the would-be bride or groom, just in the nick of time. You may celebrate, or laugh, or shed a tear, as we head to credits, and then on to “happily ever after.”
But here’s the thing: Have you ever thought about how tough it might be to be the other person? You know, the one who was just about to get married? That’s a tough spot to be in, right? Having your about-to-become-your-spouse led away, at the very, very last moment?
OK, OK, so maybe there aren’t too many dramatic wedding interruptions every day. But there are plenty of other circumstances where a last minute reversal can make things murky, right when someone thought they were about to lock down their amazing future. Home buying is one such situation.
For example? What if you had just sealed the deal on a property, ready to make it your Forever Home – only to find out that, through some complicated process, someone else actually already owned it? That could invalidate your sale, and snatch away the future you thought you had all planned out.
That’s where the crucial concept of title comes in. If you’re in the market to buy or sell a home in Chicagoland, it’s important to understand title – including the in-depth process that goes into a title search and examination.
The Importance of Title Insurance for Buyers, Sellers, and Lenders
In real estate, title is the official term used to describe who has the legal ownership of, and thus the right to use, a certain piece of property. In some cases, there may be mortgages, liens, and judgments on a piece of property that can complicate the sale. In other cases, paperwork could be revealed to be invalid, or forged, or unexpected parties could make a claim to the property. There’s a lot of history when it comes to homes and land, and many, many moving pieces to each and every real estate transaction. A lot could go wrong, and many things take time and research to fully understand.
Generally speaking, because of the importance of establishing clear title, a critical piece of the home buying and selling transaction is obtaining title insurance, which comes in two “flavors:”
- Lender’s title insurance policy, which protects the mortgage lender and offers assurances that they’re making a secure, reasonable investment in a property. Generally speaking, this type of title insurance is required as a condition for receiving a loan, and is paid for by the buyer.
- Homeowner’s title insurance policy, which insures and protects the buyer’s ownership rights to the property. Here in Illinois, this type of policy is optional, but is generally procured by the home seller as part of their closing costs, as a sign of respect and good faith for the buyer.
Now, in order to ensure that there is clear title on real estate, and allow the title insurance process to move forward, it is important to perform a title search on a home.
What Goes Into a Title Search?
Before an owner’s or lender’s title insurance policy can be put into place, a title search will have to be performed on the property that is being sold.
Broadly speaking, the title search is performed by a title company or an attorney – such as the staff of the Gunderson Law Firm, where our attorneys are also title insurance agents for several of the top title insurance companies in the world.
During a title search, the title company or agent looks at a variety of documents, papers, and historical records, often including property records and land surveys. The title professional combs through documents and historical records looking for anything that could potentially make the seller’s ownership of the home (and, thus, the potential sale), illegitimate. That may include searching for things such as unpaid taxes, outstanding mortgages, liens or judgments, pending legal actions, and more.
In other cases, a title professional may suss out evidence of fraud, errors, or omissions on certain papers or records. In other events, a title search may uncover a previously undisclosed heir to the property. Or, more commonly, a title search may determine that certain easements or zoning issues create the potential for complications or issues when establishing clear ownership.
Basically? The intent of the title search is to determine that the seller clearly owns the properly, and is able to sell it without issue. If problems are discovered, the title agent must present this information to the buyer, in order to ensure that the transaction is transparent, open, and (hopefully) successful for all parties. Once all of the research and examinations that make up a title search are completed, the title company issues a summary of their findings, as well as a more formal title letter. After valid title is established, the home sale proceeds – and title insurance is put into place for lenders and buyers, in the event that the title search was incomplete, whether due to oversight, error, or the revelation of new information.
Making Your Real Estate Transaction Work for You
Establishing title and securing title insurance are among the many steps that go into successfully completing a real estate transaction. For buyers and sellers alike, it’s incredibly important to consider all of the actions you can take to protect yourself at every step of the way. Looking for help making sure that your “t’s” are crossed and your “i’s” dotted?
The Gunderson Law Firm is here and ready to help with title insurance, title examinations and disputes, and so much more. Our team brings unparalleled expertise and insight to the table, reinforced by years of experience and long-term connections throughout Chicago’s real estate, finance, and insurance industries.
Have any further questions about title, or any other aspect of buying or selling a home in Chicagoland? Don’t hesitate to drop us a line or give us a call to arrange a free consultation. Our attorneys and staff specialize in helping individuals and businesses in the State of Illinois with real estate transactions insightfully, promptly, and professionally.