Buying your first home is very exciting! It can also be very overwhelming given how many different steps are involved. One of the most important things to be aware of is ensuring you have “good title” to the home you purchase. What does good title mean and how do you know when you have it? Read on to learn more.
“Title” generally refers to having a right of ownership in a particular piece of property. “Good” title means that your ownership interest or right in that property is legally valid or effective such that it is “marketable” title. Having >marketable title means that you can sell that property to another purchaser or mortgage it.
Why is Good Title Important?
You need good title for a number of reasons. First, if you pay money for a property that someone other than the seller currently has pre-existing good title to, you may not be the rightful owner. This likely means you will be spending lots of quality time with an attorney while you try to figure out who gets to keep the property. Second, if you do not have good title, that can reduce or eliminate your ability to sell the property in the future. It can also impact your ability to get a mortgage, as most lenders will not mortgage your property it you do not have good title to it.
How Do You Know if You Have Good Title?
Most homeowners do not have the time or experience to confirm that they have good title for their future home. Instead, they use the services of a title company. A title company’s job is to make sure that the property is marketable and legitimate. They do this by conducting a title search, which involves extensively examining property records to make sure everything is on the up-and-up. A title company can confirm that the person selling you the title to the property actually has the ability to do so. They will also look for other financial risks associated with the property, like outstanding mortgages or liens, unpaid taxes, and even easements. After the title company conducts its search, it will provide you with an “abstract of title,” which generally describes the results of its search.
Do I Need Title Insurance?
If you are buying your first home, it is very likely that someone has already told you about title insurance. Title insurance protects you or your lender against claims that you do not have good title to the property. It is generally issued to you by the title insurance company which conducted your title search, and it is generally a smart investment that protects you from issues down the line.
Questions About Buying Your First Home or Good Title? Contact a Real Estate Attorney
Buying your first home should be as exciting and happy a process as possible! If you are buying your first home in the Chicago area and have questions about good title or any other real estate law issues, do not hesitate to contact M&A Law Firm, PC, today. Our experienced real estate attorneys will work to make sure your first home buying experience is as memorable as possible—for all the rights reasons.