What Documentation Proves a Home Is Owned Free & Clear?

Personal property, like a motor vehicle, has a single title document that designates who owns the property and if she owns it free of any liens. Homes and real estate do not have the same type of title document. Determining if a home is owned free and clear is more complicated than just looking up a form, and the process requires much more documentation.

Abstract of Title

Most real estate has an abstract of title that is filed at the county courthouse or other designated place. This abstract details the ownership of the property throughout the years, and it also indicates if the property has had any mortgages against it. Each transfer of ownership should be indicated on the abstract of title. The abstract also includes a legal description of the property transferred. Some abstracts of title date back to the colonial times when a smaller property may have been part of a much larger parcel.

Deed

The deed to a property indicates that the ownership has been transferred from one party to another. It is the proof of the transfer, or conveyance, of property. The deed also includes a legal description of the property, possibly referring to county tax maps that name the specific property. A warranty deed means that the seller warrants that he is the owner of the property, free and clear, and has the right to transfer ownership. A quitclaim deed means that the conveyor is abandoning any interest that he has in the property, but he is not saying that he has full ownership.

Title Search

A real estate lawyer should perform a legal title search on a property before you purchase it. In a title search, a lawyer or paralegal examines the abstract of title to check each sale and make certain that each transfer appears to be legitimate. He will also check to be certain that any mortgages have been paid off, by checking for the satisfaction piece on the mortgage. He may also check each person who has owned the property for bankruptcies or other judgments that may have created liens against the property. When the search is complete, the examiner will give an opinion of the title, saying if he believes that the title is clear.

Title Insurance

Even if the title examiner says that the title to the property is clear, you may still want title insurance to guarantee that the examiner's opinion is correct. If you are borrowing on a mortgage to purchase the property, the mortgage company will probably require a policy to protect its interest from a faulty title. A title insurance premium is a one-time fee, and the amount depends on the purchase price of the home. The title insurance will pay up to the face value of the policy to satisfy any liens that arise against the property in the future.

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