What if the latest owner has a contractor’s lien on the house for an unpaid bill?
Or if they are beyond on their property taxes? Or going through a messy divorce? Or get an unexpected large medical bill that finalizes as a financial judgement against them?
Clean title from other owners tells you only a limited story. The current owners can completely trash the title but still have an existing mortgage.
> I build the potential clouded or impaired title into my risk model.
This is built into my acquisition price. Across hundreds of transactions, I have yet to experience a loss. I’m effectively self insuring against the risk, vs the cost I would’ve paid for title insurance (which would work out to tens of thousands of dollars in aggregate).
Property tax payment status, divorce cases, mortgages, and mechanics liens are all public record and can be searched for as part of researching a property. If the claim is public, I can settle it as part of the transaction on the settlement sheet with the settlement agent (who will disburse funds accordingly and handle recording/releases in concert with my real estate attorney). Unrecorded potential claims against the property are very rare in my experience. That isn’t to say it can’t happen, but only that if it does, I’m likely still coming out ahead over the long term.
The tax stuff is all public record - easily verifiable. Deaths are also generally publicly verifiable.
The rest of the stuff would essentially require intentional fraud by the seller. You’d be able to recoup most of those costs via court. Annoying for a private individual, but I tolerable as part of a portfolio.
I’ll be real, you can pretty quickly tell the type of person you’re dealing with in a home sale. The people who have a tendency to “trash their title” also show other signs of untrustworthiness during the transaction.
Most municipalities now have online records as part of their recording keeping system. This includes all of the tax information about a property. Might even include records of various permits.
If they’re not online, then they should have records in the municipal or county office. Might be a small fee to pull them, but they’ll have them.
If they don’t have records, then you may want title insurance.
I reality the dozens of Counties and hundreds of municipalities in just NJ are all different. Some online. Some not. Some online but with enormous time lag. Differing systems with different data. My township and a few dozen others were all coveted by a tax assessor who had an abomination of a Flash based web site that degraded to the devil’s own JavaScript when Flash not available.
Then you need to know the County system. And state system.
Then get into the courts. Court eFiling and search capabilities vary wildly.
In my town’s case you would need to do several on-site searches plus a few Internet based ones to do a proper title search.
None of what you state is accurate. What the title -search- will do is show you all of these cases which need to be cleared before insurance is issued.
Title insurance is not about the insurance, it’s about the scan.
>What the title -search- will do is show you all of these cases which need to be cleared before insurance is issued.
No, because title insurance doesn't cover some of those things to begin with so title insurance companies and banks issuing loans couldn't care less.
>Title insurance is not about the insurance, it’s about the scan.
Yes, the scan they farm out to small software companies that scrape public records and return an "all good" if nothing shows up. This query is usually done by a teenager or early twenty-something in a call center with zero experience, just data entry.
Or if they are beyond on their property taxes? Or going through a messy divorce? Or get an unexpected large medical bill that finalizes as a financial judgement against them?
Clean title from other owners tells you only a limited story. The current owners can completely trash the title but still have an existing mortgage.