Purchasing a home is an exciting time for many Connecticut residents. If this is your first time purchasing a home, you may find yourself overwhelmed by the number of steps that must be completed.
One of the most important steps is conducting a title search. This is a search of public records to confirm that the seller is the legal owner of the property.
This may sound like common sense. After all, why would a seller claim to own a home that is not theirs? It is natural for you to assume the seller has the power to sell the property.
However, someone else could have a lien on the property. This does not necessarily mean that the seller does not own the property, but it might mean there are other parties that also have a claim to it.
What a title search could reveal
Creditors are a common example. Perhaps the seller had a credit card that they stopped making payments on and the credit card company sued and obtained a judgment against the seller. If the seller does not pay the judgment, the credit card company can place a lien on the seller’s property.
The problem here is that when you purchase the property, you could also purchase this debt or any other liens on the property. Other types of liens could be unpaid property taxes or even another mortgage lien.
A title search that reveals liens or claims on the property could majorly impact your decision to purchase the property. You might decide not to go through with the sale.
Potential options to clear title
However, discovering additional liens is not unheard of. Many times, a buyer and seller can develop an agreement on how to handle the liens. A typical solution is to agree that the liens will be paid with the proceeds the seller receives from the sale of the property.
This allows the buyer to purchase the property free and clear of any liens and the creditors to receive their payment. The time and effort of a title search is well worth it to avoid creditors or someone else coaming ownership from knocking on your door in the future.