The Title Search
What happens right after escrow is opened?
Right after escrow is opened, the escrow officer orders a title search to be conducted to trace the chain of title back through every available record. This title search will determine whether the person representing himself as the current owner actually has legal ownership and hence the right to sell the property at all. The search will also reveal what, if any, defects exist on the title. Just as a life insurance company will not insure a person without a thorough physical examination, a title insurance company will not issue a policy of title insurance without doing a thorough title search.
The results of this search are compiled into what is called, in most Western states, as a preliminary report or "prelim". In some states, it's called a commitment of title; in others, it's called an encumbrance report. No matter what it is called, it reflects the conditions under which a title company is willing to issue a policy of title insurance. Still other states handle their title search results somewhat differently. Some title search firms will issue an abstract of title, "abstract" for short, which reflects the various documents in the chain of title without giving any determination as to the title's condition.
How is a title search performed?
In order to trace a property's chain of title, a title company examiner searches the records of the county recorder, county assessor, and other government taxing agencies to locate any and all documents which might affect the title to a given property.
Most title companies have their own "plant" department. This is where they keep duplicates of recorded documents, along with copies of certain recorded documents from offices and courts at the federal, state, county and municipal levels, any of which may affect titles. Thus, the examiner generally doesn't even have to leave the building to search through these documents.
In the search, the title examiner has four primary determinations to make:
- The exact description of the property
- The estate or interest in the property
- The vesting of the estate or interest, and
- The exceptions (liens, encumbrances, and defects) affecting the particular vested interest
