What Is A Certificate Of Title?
A certificate of title is a legal document issued by a government agency that indicates proof of ownership of real property or titled personal property, like a car or a boat. Once ownership is transferred at closing, the certificate of title is proof of property ownership. It lays out any liens, easements and other claims against the title.
The document includes information such as:
- The name of the owners or title holder
- Description of the home or property
- Lienholder’s information (if any)
Upon the sale of the property, the certificate of title will transfer to the buyer, as long as there are no hiccups along the way. However, if the certificate of title is “dirty,” meaning it has liens or easements, further research will have to be done to see how this impacts the purchase of the home.
When buying real estate, make sure the seller has a clear title to sell to the buyer. Certificates of title with liens or levies from creditors may present an issue.
For example, let’s say the owner of a property you’re interested in has outstanding mortgage payments or owes contractors for work they did on the home. Since the title is not clear, the new owner would be responsible for resolving these liens, which, after buying a new home, is the last thing you want to deal with.
Purchasing a home with a free and clear title ensures you’ll have complete ownership and third parties won’t pose questions of ownership in the future.