In a home purchase transaction, one of the first tasks a purchaser must undertake is retaining a real estate lawyer. Most purchasers are unfamiliar with what a lawyer does on their behalf to ensure that they become the legal owner of their home. Usually, a purchaser’s primary concern is the cost of the closing, and when they will receive their keys. With respect to the cost of the closing, many purchasers fail to understand why a title search of the property needs to be completed and, by extension, why a lawyer must charge for this service. This column explains why a title search is necessary.

First of all, readers should know that “title” means the right of ownership in real estate. Additionally, it can be used to refer to the facts or system constituting such ownership.In order to understand what a title search is, it is first necessary to understand how our land registration system works. To prove or claim that one has an interest in land, he or she must register or deposit a document on the title to the land in question. For example, a home purchaser’s lawyer typically registers a deed (i.e., the record of ownership) and a mortgage on title to a newly acquired property. Once such documents have been registered at the local land registry office, anyone looking at the title knows of the new interest in the land. Ontario’s land registration system is open to the public and as a result, anyone paying the applicable fee can determine what instruments have been registered on the title to a specific piece of land.

A purchaser’s lawyer conducts what is called a “title search” to ensure that the home you are buying has a good and marketable title. The title search reveals any matters that are still registered on title, such as existing mortgages or liens. Basically, the purpose of this search is to allow the lawyer to determine what is registered on the title, what defects or deficiencies are on the title, and how they can be remedied. The more practical reason for searching the title is so that your lawyer can confirm to his or her client that their title is marketable. This means that the owner will be able to sell, mortgage or otherwise deal with their title in the future.

Once your lawyer has completed a title search, he or she sends what is called a letter of requisitions to the lawyer for the vendor. This letter notifies the vendor’s lawyer of any defects in title that have been discovered so they may be remedied prior to closing. Serious legal consequences can result from a failure to submit the letter or requisitions on time.

A title search must be conducted every time a home is sold. The only time that a full search of title is not conducted is if the buyer’s lawyer has already conducted a search on the property in question. In such a case, the lawyer may choose to simply update the search since the last time a search was conducted.

The cost of the title search varies depending on the type of property and the land registration system for the province where the property is located. Many people mistakenly believe that they can save money by doing a title search themselves. This is simply not true. Moreover, reviewing a title search is a complex process. Lawyers and their title searchers are trained in the complexities of reviewing and analyzing title documents. Homebuyers trying to do it themselves may fail to recognize serious problems. A mistake made while searching title can bring dire consequences.