Why you need a Title Search for every Property
I often see people offering Quit Claim deeds for very low prices. Often there are back taxes owed on these properties, Most people know to check for them. However, too many people have skipped the Title Company and Title Search, paid a few grand to the seller for a property, and recorded the deed themselves. It’s later when they may receive some unpleasant surprises. Any recorded valid judgments against the current or previous property owner(s) stay with the property even AFTER it transfers.
If you take the deed, the judgments against the previous owner stay with the property!
After putting 10s or 100s of thousands of dollars into a purchase and rehab, you could lose it all to a judgment holder.
What I’m going to show you is NOT a substitute for a complete Title Search. I do this for properties that are behind in property taxes or have been vacant for a while. It only takes me a few minutes and helps me identify potential issues early on, before I send a purchase agreement to the Title Company for a complete Title Search (I use Performance Title in Kettering).
It IS an excellent example of why looking up the property taxes and paying for a Quit Claim deed is a bad idea. It’s why I ALWAYS close with a Title Co and get a complete Title Search for ALL previous owners, transfers, and any other potential issues.
Here’s how to do a quick check on the property. The steps should be similar for any county, although the details and websites will differ. This example is for a property in Dayton, Ohio located in Montgomery County, Ohio.
FIND THE PROPERTY OWNER
First, Go to the County Auditors page search for the property by address. http://www.mcrealestate.org/search/commonsearch.aspx?mode=address
Note: You can put in partial information, and it’ll give you everything that matches. It can be great way to find a property when you have incomplete information.
Click on the search button, and it’ll give you
all the results.
Click on the result you want, and it will bring you to the property information page. It’ll give you the property owner of record and show you the basic property details. Make sure you look in the transfers section, NOT the current mailing address. The Tax Year in the upper right corner shows the current Tax Year by default, not the Calendar Year, and it matches the mailing address to the owner of record for the Tax Year shown.
In this case, the owner is SCOTT HUTCHISON PROPERTIES INC. That’s the information we’ll need for the next step. We can also see that he bought it from HUD in Jan 2005. Scroll down the page, and you can see the property taxes due. You can go to the Treasurers page for more details.
WARNING: If a the property tax lien has been sold, the total will NOT include the balance owed on the tax lien.
Now, let’s take the name we found, and move on to the second step.
GET THE COURT RECORDS
Go the County Clerk of Courts page. Dayton is in Montgomery County, the website is http://www.clerk.co.montgomery.oh.us/pro/
On the left, Enter the company name and the three letter code, then click “Search”.
Be careful, there are often similar names to the one you’re searching for. Sometimes it’s very difficult to determine which apply. The Title Company can sort them out with a full title search.
You get a list with 12 results, 3 closed, 9 are open. In this example, they are exact matches, and are all judgments. You can open each one and look at them. When you click through on one, Use “Hit List” in the upper right to go back to the list.
We’ll have to open and review each file on the list. After reviewing the individual files, we can see the first three 2014 filings are renewing the 2009 judgments. They are renewals, not separate judgments, so we don’t count the three from 2009. After opening and reading the second set of three in 2014, we can see they were transferred from another county to Montgomery County. They appear to be duplicates of the first three in 2014, so for this example, we will ignore them.
That leaves us at least 3 unique judgments, the first three listed for 2014. Reading each judgment gives us the numbers we need. The judgments are all from 9 years ago, so I’ll do the basic interest calculation to get the total as of 7/10/18.
- The first one, 2014 CJ 193949 is for $41,205.29 at 15% interest since 7/10/09. The total for that one is $96,832.43.
- The second one 2014 CJ 193950 is for $51,623.93 at 13.5% interest since 7/10/09. The total for that one is $114,347.00.
- The third one 2014 CJ 193951 is for $51,623.93 at 13.5% interest since 7/10/09. The total for that one is $86,511.00.
In total there is over $300,000 worth of judgments attached to this property, in addition to the $16,000 in past due property taxes.
If you take the Quit Claim deed for the property, the $300,000 in judgments remain with the property.
To get clear title, the liens have to be released from the property. There are several ways to do that, all take time and effort, and sometimes dollars.
That’s the quick check for you. It’s precisely why I use a Title Company, and never accept a deed without a Title Search.