When purchasing property there are several documents that certify your purchase and are required by mortgage lenders and mortgage insurers. The required documents are found in a Title Report, which outlines the legal status of a property and any information pertaining to the ownership of the property.
What’s Included in a Property Title Report?
The property title is the legal right of ownership of a piece of property. It gives a person the right to use and sell property.
Whether purchasing a house or land, the title search and title report are essential parts of the buying process. The Property Title Report includes the deed, the chain of ownership, a full legal description of the property, zoning laws, property value, current tax value, mortgage documents, and liens.
Property Title Search
A property title search examines public records to confirm that the seller is indeed the legal owner of the property. Old claims or liens on the property can also be found by a title search.
At times the seller/owner may not know that there is an old claim on the property’s title. Therefore, verifying any easements and restrictive covenants as well as Mortgage liens and debts from previous owners is essential.
Easements & Restrictions
Easements and restrictions are recorded with the deed and follow the property which means they do not expire when the property ownership changes. There are benefits of having easements and restrictions but sometimes they can be a hindrance.
The most common easement is one that grants road access giving one permission to use a road on a neighboring property to access your property. Other easements or rights that are important to know when purchasing a property are:
- Water rights to a spring or shared well
- Septic/drain field easements
- Utility easements
- View easements
- Debt from a Previous Owner
If a title search is not performed and there are any unpaid bills such as property taxes, HOA fees, unpaid home improvement bills, or
mortgage liens from previous owners will now be the responsibility of the new owner.
Property Deed
An owner of a property will possess both a Title and a Deed. While the title shows the legal right of ownership, the property deed is the written document that shows ownership.
The deed must include:
- The name of the grantor (seller)
- The name and address of the grantee (buyer)
- A legal description of the property
- The name of the preparer
- The signature of the grantor
County Register of Deeds
The deed must then be recorded with the Register of Deeds in the county where the property is located. After closing on your home or land you will receive a deed that shows full ownership of the property.
Deed of Trusts
If a mortgage loan is obtained for the property purchase, there will be a deed of trust that will be recorded. This is a security interest that states that the buyer will repay the loan and the mortgage lender will hold the title to the property until the loan is paid in full.
Upon the final payment of the mortgage, the buyer will get a release document saying the property is paid in full and the title and deed, which will be recorded with the Register of Deeds.
Types of Deeds in North Carolina
In North Carolina, there are several different types of deeds:
- General Warranty Deed: assures the buyer that the seller is the legal owner and has the right to sell the property and that the property is free of any liens or encumbrances except those already recorded
- Special Warranty Deed: guarantees that the seller received title to the property and that the property was not encumbered during the time the seller held title except what is noted in the deed.
- Quitclaim Deed: has no warranties and is used when the title is being passed from one owner to another without the exchange of money. Quitclaim deeds are generally used when making a correction of misspelled names, legal name change, in divorce to grant
ownership from one spouse to another and parents passing ownership of the property to their children.
When purchasing property in NC a title search should be done to ensure that the seller can convey a clear title to the property. While anyone can do a title search it is best to get an attorney or a title company to perform the title search during the closing to make sure nothing is missed.
Property Title Insurance
Mortgage lenders usually require a buyer to have a title search and property title insurance. Title insurance is purchased with a one-time payment paid during closing and protects the buyer against any problems with the title that may have been missed. It also ensures that the title company will handle any resulting problems.
Having a reliable real estate agent can help you find properties that meet your needs. They are valuable resources for helping you understand zoning, easements, and deed restrictions on properties.
