What is a Title Search?
What is a title search?
A title search is a report of the public documents record, typically performed by a title company, regarding a specific parcel of land. The search involves documents located in the Recorder’s Office of the county the property is located in. These documents may include:
- Rights of way
- Judgments affecting the title to, or the use of, the property
The results of the search reflect exceptions to title insurance coverage for the parcel and are colloquially called a Preliminary Title Report.
Preliminary Title Report
The purpose of a Preliminary Title Report is to provide a report of the public-record documents of a parcel so that the buyer can ascertain whether the parcel offers the right conditions for the intended use at a reasonable, market-based price. The title company’s search of the public record may reveal, for example, a utility easement covering the entire property or an outstanding judgment lien. These factors could negatively affect the use of the parcel, and would negatively affect the market price. If unknown, the parcel would most certainly be overvalued.
What if the Title Company misses something?
Title insurance policies provide coverage for risks that exist at the time the policy was written. If a repairman files a lien on your house to secure payment for services performed after the policy is written, that lien would not be covered by title insurance. To be covered, the risk must have:
- Existed before the policy was issued, and
- Been undiscovered during the title search
However, if the risk existed when the policy was written and was not properly identified, States impose different standards regarding what constitutes negligence. Idaho and Washington courts hold that title insurance companies do not have a general duty under the law to disclose potential title defects before issuing a policy. Cummings v. Stephens, 157 Idaho 348, 336 P.3d 281 (2014); Barstad v. Stewart Title Guar. Co., Inc., 145 Wn.2d 528, 39 P.3d 984 (2002). So, if your parcel is located in Idaho or Washington and the title company failed to disclose a title defect, you can recover under the title insurance policy only, not in a negligence lawsuit.
In Montana, title insurers must disclose potential title defects in the title report. Lipinski v. Title Ins. Co., 202 Mont. 1, 655 P.2d 970 (1982). The Montana Supreme Court stated in this case that “[a]lthough title insurance applicants are interested in obtaining insurance coverage, their primary interest is in what the examination discloses.” Id. at 10, 655 P.2d at 974. Therefore, a title insurance company “owes its clients the duty of conducting a title search with reasonable care.” Id. So, if you get a title report in Montana you may be able to pursue a negligence claim against a title company that fails to completely disclose title defects.
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