One of the most important steps in home buying is the title search, the process of making sure that the property is what you think it is, and that the person you’re buying it from has the legal right to sell it.
Performing a title search is best left to the experts, and you definitely need to hire a title search company if you want a title insurance policy to guarantee the title. It's possible to perform your own search, however, with some deep digging into Texas county records.
What Is a Property Title Search?
A title search in the state of Texas is an integral part of most real estate transactions. The search involves researching recorded title documents and official public records to confirm ownership and identify claims against the real property. It takes place before a real estate purchase is completed so the buyer and the lender can be sure of what they are getting.
A title search checks the entire ownership history of the property to make sure that the seller has full legal ownership and the absolute right to sell it. A "clean title" establishes that the seller has sole ownership of a piece of property, and a "dirty title" indicates that there is some uncertainty about these matters.
For example, a title search may find that a previous owner some years back transferred the property to a relative with a document that was not properly signed or recorded. This raises questions about the chain of ownership, and is a red flag for mortgage and insurance companies.
Showing Outstanding Liens or Restrictions
Beyond verification of ownership, a title search can show outstanding mortgage debts or liens on the property that the seller did not reveal to the potential buyer. Some properties come with deed restrictions, like homeowners' association rules, that limit what can be done with the property that were written into deeds years ago.
This can reduce the value of the property, so it’s important to learn of any restrictions before the real estate sale is completed. Any title issues become the new owner's problems.
Who Performs a Texas Title Search?
Most title searches are performed by title search companies with training and expertise in the area, though some are done by attorneys. The process involves reviewing and evaluating complex legal documents that take training to understand.
While it is possible for an individual who is considering buying a Texas property to conduct the title search on their own, it may be better to hire a professional to help. In either case, it is a good idea to get an understanding of how a title search is performed before making this decision.
Index of Property Records in Texas
A title search in Texas, like in other states, involves the analysis of real property records, so the first step in a search is to determine where these records are kept. In Texas, property records are filed with the county clerk’s office in the county where the real property is located. The clerk will require the property address to locate the deed in the deed register.
Real property records are public in Texas so anyone can review them. In fact, most counties in Texas make the records available digitally so they can be searched online without having to visit the clerk's office. This includes large counties like El Paso, Harris, Bexar, Hidalgo and Tarrant.
Go to the website of the clerk for the county in which the property is located and find the search portal for real property records. Websites from different counties are not set up identically, but it is not difficult to find the appropriate search portal. Generally, the idea is to enter a property address and/or legal description into a search bar to locate the property.
Property Records That Are Not Digitized
If the records do not appear when the address is entered, they may not have been digitized. If that is the case, it will be necessary to go to the county clerk’s office in person during business hours to search the physical records.
Abstracts and the Chain of Title
Whoever conducts a title search works to recreate the "chain of title." Chain of title is a legal term meaning a list of everyone who has owned the real property at issue – who they bought it from and who they sold it to. This could go back many decades or even centuries for an old property.
Title companies term this an "abstract." Look for an old abstract in the records. If prior owners prepared an abstract before buying the property, that document might be in the county property records, which could make the process easier.
Recreating the Chain of Title
If there is no old abstract, it will be necessary to construct the chain of title. This starts with finding the most recent transfer deed by which the property was transferred to the current owner. This deed contains the name of the current owner (termed the grantee) as well as the name of the individual who sold the property to the current owner, termed the grantor.
It is the first link in the chain. It is then necessary to find the deed that transferred the property to that seller, and on and so on, as far back as possible. Look for any deed of trust as well. These are legal instruments used to create a security interest in real property when legal title is transferred to a trustee as security for a loan between a borrower and lender.
Review each deed with care. In order to complete a useful chain of title, the deeds must indicate that the real property changed hands from one owner to the next to the next without any gaps or ambiguity. Each deed must be properly signed, dated and notarized.
Current and Released Charges on Title
As the review of the chain of title continues, look for any liens, mortgages, leases or other documents evidencing financial debt secured by the property. For each one, there should be a release on record, other than for the debts that are still current. If this process seems too difficult, bring in an attorney or a title search company to do the work.
Obtaining Title Insurance
Title insurance is a form of indemnity insurance. Its purpose is to protect home buyers and their lenders from financial losses that would result from defects in a title to a property.
Generally, the borrower purchases lender’s title insurance to protect the lender. Another common type of title insurance is owner’s title insurance, purchased by the home seller to protect the buyer.
Buying title insurance is a smart move because it guarantees that the title is free from unpleasant surprises. Title companies issue these policies after they’ve reviewed the title, a service they are more than happy to undertake for a fee.
Teo Spengler earned a JD from U.C. Berkeley Law School. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an MA and an MFA in English/writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.