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They say you can't judge a book by its cover, but when it comes
to buying or selling land, title is exactly where you want to start.
Why? Because a title search determines beyond any doubt not only
who owns the land and what can be done on it, but whether it has
any skeletons in its closet, so to speak.
Through a title search, you can discover secrets involving anything
from building liens to maintenance orders that can drain your bank
account or delay or shut down a sale if they turn up as surprises
at the wrong time.
Title searches -- usually conducted by lawyers or real estate agents
as part of a house purchase or refinancing -- can be undertaken
by homeowners themselves. But it's the rare consumer who does so.
And even individuals willing to hike to their local land title
office, plunk down the approximate $12 fee, hand over a legal land
description or urban street address and spend a few hours on the
search (then wait one to three weeks for the application to be processed),
will need a lawyer to finish off the process.
That's because a title search does not reveal two
essential pieces of information: whether there are unpaid taxes
and other liens (beyond those defined below) against a property.
Nor will it identify leases of less than three years, which can
involve such nasty surprises as a furnace rental that would mean
the furnace would be picked up shortly after you take over the property.
"The law is complicated and not really a do-it-yourself-thing,"
says Brian Bigras, general manager of the British Columbia Land
Title Office in New Westminster. "It's more common to see people
discharge their own mortgages. Even people who buy and sell homes
without an agent usually hire a lawyer. Their fees are very competitive
-- around $500 for a fund transfer -- and the title search is included
in this."
Of the one million land title transactions Bigras
and his staff of 120 process each year (they work on 17,000 at any
given time), only a handful are initiated by private citizens.
What a title search will reveal
Still, it never hurts to know what your lawyer or real estate agent
should be doing for you, and when a title search is necessary.
You need a title search in any of the following four situations:
when you're buying or selling property, refinancing, taking out
a secured loan against your home or applying for a building permit.
A title search reveals:
- the name(s) of the legal owner(s) of the property and their
occupation(s) at the time of purchase;
- Whether joint tenancy is involved (it's good to know how many
people you're dealing with!);
- If a mortgage still exists (no small financial consideration);
- Whether there are any "charges on title," as in the
case of a woman owed child support who has put a financial lien
against her ex-husband's property until he has paid. That means
he can do nothing with his property until the outstanding amount
is paid;
- Easements and statutory rights-of-way (allowing people other
than the owner access to a property -- for example, the right
to install pipelines or telecommunication lines);
- Building liens (as when a contractor who did work on the property
hasn't been paid by the owner);
- Mineral rights (in some cases, the government may own mineral
rights on rural property that is privately owned. Think of the
Beverly Hillbillies TV show, where oil began spurting from the
backyard).
Luckily for Canada, we're on the Torrens System of
title searches, developed in Australia in 1858 by Sir Robert Torrens.
This means that despite some subtle differences between each province
and territory, the federal government guarantees the certainty of
information on both property ownership and "encumbrances against
the land," as outlined above. This eliminates the costly court
battles and title disputes often seen in the U.S.
The Torrens System -- widely considered the most advanced and safest
in the world -- is why Canadian searches involve only a nominal
fee, and land transfers are relatively simple.
"Conveyance lawyers are all online with the land title office,"
says Joe Wilder, managing partner at Wilder, Wilder and Langtry,
a full-service law firm in Winnipeg. Thanks to the Torrens System,
he says, "it doesn't take long to complete a search, and it
is part of the legal work involved when you buy a house. We charge
about $10."
Roger Howay, partner at Blake, Cassels & Graydon LLP in Vancouver,
adds, "With the computerization of some of the land title systems
in Canada in recent years, it is very easy for lawyers, real estate
agents and others who deal in title-to-land to obtain searches of
property very quickly and efficiently."
So, whether you're one of the few who opt to do it
yourself, or you just want to sound intelligent when vetting what
your legal and real estate advisers are up to, now you know what
a title search is and how it can help rattle the bones of whatever
skeletons may be lurking in the closet.
Pam
Withers is a business journalist, business-book editor and author
of several best-selling teen novels. Julie Burtinshaw is a researcher
and novelist.
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