Title transfer is an important and routine part of the home buying process. It’s also a step that’s often not brought up until after you have an accepted offer. This is why I thought it would be beneficial to go through the basics of title transfer now, to give you an idea of what it’s all about vs when you’re in the weeds of your purchase.

Title Transfer

Title is a legal term referring to the registered owner of property. Part of the closing of a real estate transaction includes transferring the title from the sellers to the buyers. When your lawyer is preparing to transfer the title of newly purchased property, you’ll likely be asked who will own it. You can choose to list one name or add fellow investors as joint tenants, such as a parent, or in the case of a marriage, list both spouses. Each person added to the title will own an equal portion of the property with the other people on title. Most lawyers will recommend that married or common law partners own the home equally as joint tenants. This is helpful to prevent the property being tied up in probate proceedings and can result in significant tax savings in the case that one owner dies first.  

Title Search

Before completing the title transfer your lawyer will perform a title search on the property. The search refers to the examination of public records to determine and confirm a property’s legal ownership, and to ensure the title on the property is clean before it transfers ownership. Many different types of sources are used in this search including deeds, tax liens, land records, and court documents. Some problems discovered in a title search can be easily fixed, while others may cause you to back out of the transaction. If there is a tax lien found on the property it cannot be sold until the sellers pay back their debt.  

Why is it Important to Transfer Title?

Transferring title is important for a few reasons. Firstly, it determines the exact moment that legal ownership of the property changes hands from the seller to the buyer. The buyer then has property rights, the right to use, occupy, or sell the property. It also protects the buyer from any claims or disputes regarding the property’s ownership such as undisclosed liens.

Second, mortgage lenders usually require the title to be transferred and clean for the mortgage loan. The transfer allows the lender to establish a charge on the title, which secures your mortgage against your property. Once there is a charge on the title, you cannot change the title or sell the property without notifying your lender.

Lastly, title transfer provides legal evidence of the sale and purchase of the property which can be important for tax and accounting purposes. It gives both the buyers and the sellers peace of mind that the transaction is legally sound and both sides have fulfilled their obligations.

Title Insurance

Title insurance protects you against problems like fraud, easements, or zoning with the title on your home, even if they existed before you purchased the property.While not required to close, it is a good idea to speak to your lawyer and discuss if it is right for you. Title insurance is usually around $2000 and is a one-time purchase included in your closing costs.

I hope this has given you some insight on title transfer, and what to expect with one after you buy a home. Title transfer is usually a straightforward process, but it is always important to have a good real estate lawyer do it for you incase anything comes up. I’m also here to answer any questions you may have!

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