The North Shore of Massachusetts is a great place to buy a home or to invest in real estate. Purchasing a home may be your largest single purchase and perhaps your biggest investment. When you spend a lot of money for real property, it is important that your home or property have clear, record and marketable title. Just what is title? According to the First American Title Insurance Company, title is “(1) A combination of all the elements that constitute a legal right to own, possess, use, control, enjoy and dispose of real estate or a right or interest therein. (2) The rights of ownership recognized or protected by the law”.
In Massachusetts a proper title search goes back at least 50 years. But if you want to know the whole history, the search may go back as far as the 1620 Mayflower Compact. The Mayflower Compact was the original creation of a “civil body politic” in Massachusetts and created the first rights of private land ownership.
Title is ownership of the land and improvements on it. When property is transferred to one person from another, that transfer is a piece of what is referred to as the “chain of title”. With each transfer, there is the potential for a problem to develop or arise. According to Old Republic National Title Insurance Company, a “title” consists of three elements:
- Rights and interests that are disclosed in the public records or by physical inspection of the property, i.e., deeds, mortgages, leases, etc., parties in possession, utility easements, etc.
- Rights and interests that are not recorded but exist, i.e., limitations imposed by laws and statutes, etc.
- Rights and interests that are hidden, i.e., forgeries, secret marriages and unknown heirs.
From these different rights or interests, problems that affect title to real property arise. To look at an example, assume that John and Mary Doe bought a home in Lynn. They apply to refinance their mortgage and a title exam reveals that an old mortgage from a prior owner was never discharged. This could potentially be a problem for John and Mary because the old mortgage remains a senior record lien on their house. There remains a cloud on title to their property which may result in title to their home being unmarketable and may make it impossible to sell or refinance, until cleared up.
Because of the importance of good title, after you sign a contract to purchase real estate you should have a comprehensive title search done. A title search generally includes a review of public records at the registry of deeds and/or probate court. The registry of deeds for the county where the property is located is responsible for maintaining a database of all recorded documents pertaining to your property. The records at the registry of deeds are indexed according to the Deed Indexing Standards for the Commonwealth of Massachusetts. These standards determine how the information is entered into the Registry of Deed’s system and how one is able to search for the records. The probate court may also have public documents that concern title such as estate and probate filings and marriage or death certificates. Only a thorough search of the public records can determine that the seller has the rights and interest needed to convey good title to the property to assure a buyer will acquire marketable title.
To further protect buyers and lenders, there is title insurance. Purchasing a title insurance policy is prudent. The premium is a one-time payment and it can protect or defend your title if a problem arises after closing. It is strongly recommended that buyers pay for an owner’s policy in addition to any loan policy required by the lender. Even if a thorough title search was done, unknown problems can arise, such as fraud or forgery, and title insurance may help you find a solution or compensate for loss.