Real property is immovable: the land remains in the same place more or less forever. But it may have changed hands many times. In Pennsylvania, as in virtually every other state, the sale of land can be a very formal transaction, comprising a deed, a loan, a mortgage, and various warranties about the physical condition of the land. Unfortunately for the buyer, none of these documents provides any guarantees that the seller actually owns the land and has the right to sell it.
In order to assure the buyer – and the mortgage lender if the sale involves a loan – that the seller is the legal owner of the land, the owner’s “title” must be examined by a qualified professional. “Title” is the legal term that means ownership of a specified tract of real property. If an owner has “good title,” no one else has any claim to ownership. A title to land can be “clouded,” however, if more than one person claims an ownership or other kind of interest.
Title examination is a review of all prior transactions involving a particular property made by a legal professional trained to understand the processes by which land is conveyed from an owner to a purchaser, by which a bank or other lender records a mortgage that secures a loan, by which liens for other kinds of debt are made against the property, by which an easement is created and by which other kinds of interests in the property are created. The title examiner can go the court house and personally review every transaction involving the property, but this process can be extremely time-consuming, especially in a city such as Philadelphia where the ownership records may go back for more than 200 years. Title examiners usually rely on an “abstract of title,” a written summary of all transactions concerning the property. Because most lenders now require prospective buyers/borrowers to purchase insurance guaranteeing “good title,” most title examinations are performed by attorneys or other professionals who work for title insurance companies.
A prospective buyer should know that most modern title examinations are made to protect the interest of the bank that is loaning money to finance the purchase. The only way that a prospective buyer can ensure that the title is clear is to retain an attorney who specializes in real estate transactions and who understands how to spot and fix title defects.