What Is an Affidavit of Title?
When someone is interested in buying a property, the buyer can get extra affirmation that the seller is the true owner with an affidavit of title document. An affidavit of title is a sworn, signed statement where sellers assert that they own the property. This kind of document can also reveal if the property has any liens against it, if it has easements or if it's part of bankruptcy proceedings. The affidavit can also be signed in the presence of a notary and finalized with a stamp.
The document will identify and describe the property in question. It will also list the seller as the owner of the property. An affidavit of title may either claim there are no liens against the property, or it will name any types of liens, such as federal or state taxes, mechanical or municipal. If there are any other types of judgments against the property, those will also be listed. Additionally, the affidavit will confirm that the property is not under any bankruptcy action.
Why and Who Should Use an Affidavit of Title?
Anyone buying property should consider asking for an affidavit of title from the seller. This form is useful when purchasing land, single-family homes, townhomes, condos and commercial property. It is smart to get an affidavit of title if the property is located on a large plot of land with multiple buildings. This way, the buyer gets confirmation of the boundaries of the property.
Buyers applying for mortgages and needing title insurance may be required to get an affidavit of title before getting approved. The lenders realize that not getting that confirmation of ownership can lead to serious financial risks, such as the buyer taking responsibility for the previous owner's debts and liens or the buyer becoming a victim of fraud.
Advantages of Using an Affidavit of Title?
The seller can prepare an affidavit of title without a lawyer's help, but the buyer may want to have their own lawyer read it over before accepting it. Buyers can benefit from an affidavit of title in the following ways:
- Confirmation of Ownership – The affidavit of title confirms that the seller is the actual owner of the property. The affidavit will define the property's boundaries and included buildings if there is a large parcel for sale.
- Clarification of Liens – If there are liens or easements, they will have to be disclosed to the buyer in the affidavit of title. Sometimes, even the seller may not be aware of various liens, so this step can be valuable to everyone.
- Approval for Mortgage – Buyers that are required to have title insurance cannot qualify for a loan without an affidavit of title. Mortgage lenders don't want to risk financing a property that is not legally available to sell or if the ownership or boundaries are in question.
When To Use an Affidavit of Title?
The affidavit of title is prepared during the sale of a property. When buyers find a suitable property, they may make an offer with the help of a real estate agent. Once the offer is accepted, the seller and buyer may start to negotiate different aspects of the transaction and set a closing date. The buyer may ask for an inspection prior to finalizing the deal. The buyer may also need to secure their mortgage financing and need the bank to conduct an appraisal.
At some point before closing, the buyer may need to get an affidavit of title to get financing and obtain title insurance. The seller must research the property and determine if there are any liens or easements before finalizing the affidavit of title. Once everything is cleared, the seller can sign the affidavit and get it notarized. Then, the final steps of the paperwork will be finished at the closing with the seller handing over the keys to the property at that point.
Related Resources
Potential buyers may need to have title insurance at closing. Lenders may require buyers purchase a title insurance policy before finalizing the home loan. Title insurance protects the property's value from being burdened with other claims, such as liens or boundary disputes. With proper title insurance, the buyer won't have to pay out of pocket for such claims.
Buyers can also do their own property title research. The process of searching for a property's title is different in each state. Generally, the buyer will need to look up land ownership records in the property's county or city. Land tax records may be helpful in the search. Many areas have this information online or housed in state government libraries.
