An Overview of the Real Estate Title Search Process in California

When you buy a home in the state of California, there’s a good chance you’ll experience the title search process firsthand. Title searches are performed for nearly all properties purchased in California, and you’ll soon understand why.

Every home buyer should have at least a basic understanding of the title search process. This process can protect you from a variety of legal risks, including future claims made against the home you’re purchasing. So you’ll want to be familiar with it.

This article explains how the title search process works in California, and how it can protect you as a home buyer. It offers essential information for anyone buying a house in the Golden State.

What Is a Title Search?

A title search is an investigation into the ownership history of a property. The goal is to identify any potential claims or encumbrances that could affect the buyer’s ownership rights. It’s an important part of the home buying process in California.

How Does It Protect the Home Buyer?

A title search can help protect home buyers from a variety of risks, including:

• Undisclosed liens or encumbrances: A lien is a legal claim against a property that can result in foreclosure if not paid off. Encumbrances are other claims or restrictions on the use of a property, such as easements or covenants.
• Forged deeds or other documents: A title search can help identify any forged or fraudulent documents in the property’s chain of title.
• Title defects: A title defect is any legal flaw that could prevent the buyer from acquiring clear title to the property.

Who Conducts Title Searches in California?

Title searches are typically conducted by title companies. These companies specialize in real estate transactions. Title companies have access to extensive databases of public records, and they know how to use them. Their title examiners will research the property’s history to identify and document any potential title issues.

According to the California Department of Insurance:

“Before issuing a title insurance policy, title companies check for defects in your title by examining title plants (a database of property information) or public records including deeds, mortgages, wills, divorce decrees, court judgments, tax records, liens, encumbrances, bail bonds and maps. The title search determines who owns the property, what outstanding debts are against it, and the condition of the title.”

How Does the Process Work?

In California, the title search process involves a number of investigative steps. You might think of it as real estate detective work. The goal is to leave no stone unturned in the search for potential title-related issues, giving the buyer and lender peace of mind.

The process usually includes the following steps:

1. Identifying the property

The first step in the title search process is to identify the property by its legal description. This is a unique identifier that includes the property’s address, parcel number, and other details. The title company will obtain this information from the buyer or from the seller’s real estate agent.

2. Researching public records

Once the property has been properly identified, the title company will begin researching public records. They’ll examine records from the county recorder’s office, the clerk of the court, and other government agencies. The title company will search for any deeds, mortgages, liens, encumbrances, or other legal documents that affect the property’s title.

3. Analyzing the chain of title

The title company will then analyze the “chain of title,” a chronological record of all the ownership transfers of the property. The chain of title begins with the original grant of land from the government and continues to the present day. It’s like a detailed legal history of homeownership.

The company will review each document in the chain of title to ensure that it is valid and that it transfers ownership of the property to the current seller.

According to the University of California:

“Prior to the close of escrow, the title company will examine all records documenting the chain of title. They will review records from the county recorder’s office and from various tax agencies so that both the owner and lender are assured that a thorough search has been made of all public records affecting the property.”

4. Identifying any encumbrances

An “encumbrance” is a claim or restriction on the use of a property. Common encumbrances include liens, easements, and covenants.

• Liens are legal claims against a property that can result in foreclosure if not paid off.
• Easements give other people the right to use the property for a specific purpose, such as a utility easement or a right-of-way.
• Covenants are restrictions on the use of the property, such as a covenant that prohibits the construction of certain types of buildings.

The title company will identify any encumbrances on the property and report them to the buyer in the preliminary title report (see below). The buyer can then decide if they want to proceed with the purchase despite the encumbrances, or negotiate with the seller to have them removed.

5. Issuing a preliminary title report

The preliminary title report summarizes the findings of the title search. It includes information about the property’s ownership history, any encumbrances on the property, and any other legal matters that could affect the buyer’s ownership rights.

The buyer will receive a preliminary title report before closing on the property. This gives them a chance to review it and ask any questions they may have.

What Happens After the Search Is Completed?

Once the buyer has reviewed the preliminary title report, they will need to decide whether to proceed with the purchase. If the buyer is satisfied with the report, they’ll sign a purchase contract and escrow will begin.

Escrow is a process of holding the funds and documents involved in the real estate transaction, until all of the conditions of the sale have been met.

During escrow, the title company will continue to research the property’s title to ensure that there are no changes that could affect the buyer’s ownership rights. Once the title company is satisfied that the title is clear, they will issue a title insurance policy to the buyer.

Related: A buyer’s guide to title insurance

As a home buyer, it’s important for you to review the title report before closing on the home and taking ownership of the property. It’s a complex legal document that you’re probably not familiar with. But it could protect you from legal risks down the road.