Title

What Title Means in Real Estate

Title is not a physical document; it is a legal concept representing the bundle of rights associated with property ownership. These rights include the right to occupy the property, the right to sell or transfer it, the right to lease it, and the right to use it as collateral for a loan. When someone "holds title" to a property, they have legal ownership recognized by public records filed with the county recorder or equivalent local authority.

Title can be held in several ways: sole ownership, joint tenancy, tenancy in common, community property (in applicable states), or through a trust or legal entity. The form of title affects inheritance, liability, and the ability to sell or encumber the property.

Title Search and Examination

Before a mortgage loan closes, a title company or attorney conducts a title search. This involves examining public records to trace the chain of ownership and identify any claims, liens, easements, encumbrances, or defects that could affect the buyer's rights. Common issues discovered during title searches include:

• Outstanding tax liens or mechanic's liens
• Unresolved judgments against the current owner
• Easements granting others partial use of the property
• Errors in previously recorded documents
• Unknown heirs or disputed ownership claims

Title Insurance

Title insurance protects against losses arising from defects in title that were not discovered during the title search. Two policies are standard: a lender's policy (required by the mortgage lender) and an owner's policy (optional but strongly recommended for the buyer). Unlike most insurance that covers future events, title insurance covers past events that may surface after closing. The premium is a one-time cost paid at closing.