What happens if title search done is wrong?
A title examination that is not performed by a
professional with a legal background, who knows how to recognize a
title defect, can result in costly corrective work when the
property owner next tries to sell or mortgage the property. A title
insurance company recently reported that it costs around $15,000 to
cure the average title defect at this time. There are so many
problems that can be missed by an unqualified "title searcher". The
24 hour turn-around companies are notorious for creating
One clue that you may be dealing with an unprofessional is the
use of the terms title search and title searcher. A
professional title examiner is not searching for the title
they are performing a careful examination of the record
title in order to determine the status.
Fortunately there are many good title examiners working in the
real estate industry and they find many problems that were missed
by less qualified people in past transactions. The first problem
that occurs when some serious defect was missed in the past is that
whatever you are transacting comes to a screeching halt. Whether
you are selling or refinancing, the defect must be corrected before
the transaction can be completed. That type of situation can give a
buyer a way out of the contract. Also, most buyers can't wait for
the problem to be solved and you lose the sale.
I can tell you what happens in most cases in my area. First the
title problem is reported to the seller's attorney who tries to
remedy the situation at the seller's cost. For a serious problem,
the issue is kicked up to the title insurance company. Then the
company farms the problem out to a law firm to resolve problem or
cure the title defect. First they will gather up all the bad
reports on the problem and then will have a comprehensive title
examination performed (too bad that wasn't done in the first place)
that costs more than it would have if done at the beginning. Then
the law firm studies the title problem as reported by the examiner
and takes time trying to determine the best way to resolve it.
Remember now, no one is in a big rush. Lawyers are slow about this
process. It may take weeks or months or years.
If you had no title insurance coverage, this cost is on you. If
you used a low cost title company or an out-of-state, 24 hour
turn-around company when you purchased your property they will not
be there for you. You need to hire a lawyer to solve the problem
before you can sell the property.
It is so much better at the beginning of your real estate
transaction to ask "how good" instead of "how fast and cheap" when
the title examination is ordered. It is a common problem that
people hate to spend money protecting their biggest investment.
They save about $50 to $150 by having a cheap, fast title search
done. In addition, when pinching pennies they often don't get an
owner's policy to protect them from that cheap title work.