Title Search

Title search is a systematic examination of public records — deeds, mortgages, assignments, court judgments, tax liens, and other recorded instruments — to establish current ownership of a property, identify all encumbrances against it, and confirm that the title can be legally transferred. Title searches are conducted by title companies, abstractors, or attorneys who review records at the county recorder's office or through online public records databases. For mortgage note investors, the title search is one of the most critical steps in due diligence.

What a Title Search Reveals

A thorough title search answers the threshold questions that determine whether a note deal is viable:

• Current ownership: Does the borrower named on the loan still own the property? If the property was transferred without the lender's knowledge, the investor faces a different set of challenges.
• Lien position: Is the mortgage still attached, and what is its lien position? Are there senior liens, tax liens, or special assessments ahead of it?
• Chain of title: Has the chain of title been maintained through proper recorded assignments? A break in the chain can delay or prevent foreclosure.
• Competing claims: Are there clouds on title, unreleased liens from paid-off mortgages, or competing ownership claims?
• Judgments and liens: Are there judgment liens, IRS liens, mechanic's liens, or HOA liens recorded against the property?

Levels of Title Research

Note investors typically use a tiered approach to title research, matching the depth of the search to the stage of the deal:

Starting with free county searches lets you screen dozens of loans quickly without spending money. You only escalate to paid searches on loans that pass your initial filters for equity, payment status, and location.

Common Title Problems for Note Investors

Certain title issues appear repeatedly in the secondary note market:

• Missing assignments: The assignment chain from the original lender to the current holder has gaps — common with loans that passed through multiple hands during securitization. These gaps must be corrected before foreclosure.
• Unreleased liens: A prior mortgage was paid off but the lender never recorded a satisfaction or release. This creates a cloud on title that must be cleared.
• Property transferred out of borrower's name: The borrower deeded the property to a family member, trust, or LLC. The loan may still be valid, but enforcement becomes more complex.
• Tax sale or tax lien: The municipality sold a tax lien or conducted a tax sale, which may have extinguished the mortgage lien entirely.
• Competing foreclosures: Another lienholder is already in the foreclosure process, which can affect timing and strategy.

Practical Tips

A clean title search confirms the loan is properly secured and enforceable. A problematic one flags risks that must be priced into the bid or resolved before closing. Here are some practical guidelines:

• Never skip title research — even on deeply discounted notes where you think the price accounts for unknowns. A loan with no lien attachment is worth zero regardless of the discount.
• Match the depth of search to the deal size. A $5,000 note does not need a $500 full title search, but it does need a basic records check.
• Build relationships with title search vendors who specialize in investor-volume work and can turn orders around quickly at competitive pricing.
• Keep your title reports on file — they become essential reference documents if you later need to foreclose, modify, or sell the loan.