A Title Search, also known as an Abstract of Title, merely shows the history of the property as it appears in the public record, as the property passes from owner to owner, together with any other documents recorded or filed in the public record affecting this property. A typical Abstract of Title will trace such history of the property back at least forty (40) years. The Abstract of Title is helpful in supplying most of the relevant information to determine the sellers’ right and ability to sell the property, and any liens and other encumbrances, but is deficient in providing the full protection a buyer needs in two respects.
First, the title search may contain errors or the public record upon which the title search is based may contain errors. Furthermore, your ownership of real property may be subject to hidden risks which would not be revealed in a title search. Hidden risks involve certain claims to property which would not be revealed by a title search. Examples of such hidden risks are forged documents affecting the title, the impersonation of the true owner at a prior closing, instruments executed by someone without the capacity to execute such an instrument such as minors, incompetents, or documents executed under an expired or revoked power of attorney, or claims resulting from decedent’s estates if heirs are not afforded the proper notice of the estate proceedings. The most diligent title search will not reveal such defects.
The second deficiency with the title search is that it affords no protection to a buyer should the title prove to be a “bad” or unmarketable title for any reason. Should the title prove to be unmarketable, the company providing the title search is under no obligation to compensate the property owner or take any steps to correct a title deficiency.