what is a tennessee title search?
If you’ve ever bought or sold property, the title company or closing attorney has performed a title examination (title search), in order to make sure that title is “clean” or that there is no cloud on the title.
What Happens During a Title Search?
When an attorney completes a title search, in broad terms, they are searching the history of the property, and establishing a chain of ownership. They are also looking for any encumbrances (claims to the property), outstanding liens, tax issues, etc. In other words, they’re looking for anything that may impede the transfer of the property from the seller to the buyer.
When the attorney starts the search, they will look for the property deed in the county public records office. Then, they will work backward from owner to owner, typically looking back at least 30 years, but oftentimes looking back 50 or 60 years. Sometimes these records are electronic, however, oftentimes a search will require the attorney to go to the county records office to look through microfiche or paper records.
Once the attorney has established the chain of title as far back as they feel is necessary, they will then work their way back forward in time, ensuring that the chain of ownership is the same. This “forward” chain ensures that the attorney finds any sales to other individuals, mortgages recorded for the property, or other encumbrances that would not be apparent in a backward search.
In most cases, this type of title search is sufficient to discover whether there are any other parties who may have or may claim rights to the property aside from the seller and buyer. If the search does turn up an encumbrance or cloud on the title, the buyer in most instances can choose to proceed and secure the property, or can terminate the contract.
Why is a Title Search Important?
Title searches in Tennessee are an important part of any real estate transaction, as it gives the parties some confidence that there are no outside parties that would assert rights to the property after the sale. Of course, no search can ever give a 100% guarantee that there is no cloud on title, because of human error, records errors, or incomplete recording. Even so, completing one in Tennessee is becoming more efficient as more records are digitized.
Completing a title search before closing a real estate transaction can help avoid costly litigation, by ensuring title encumbrances are addressed before the sale takes place.
Do You Need Title Insurance?
This is a very common question for buyers, because it seems like just another expense on top of an already expensive purchase. However, when you contract with a company to insure your title, they can help you avoid a much greater expense in the event that a formerly undiscovered lien pops up, or if someone challenges your right to title. In those cases, if you don’t have title insurance, you could be stuck with the bill to litigate the issue, pay court costs, pay off past debts secured by the property, etc.
Whether or not you purchase title insurance is going to come down to your personal appetite for risk. However, it can be a good idea to secure title insurance in conjunction with a good title search in every case. After all, an ounce of prevention is worth a pound of cure.
