Title Search
An examination of public records to confirm property ownership, the note's lien position, and any liens, judgments, or defects that affect value.
A title search is the examination of public land records to determine the current state of a property's title: who owns it, what liens and encumbrances are attached, the priority of those liens, and whether any defects cloud the chain of title. In note buying, a title search is a standard part of due diligence because it confirms the two things a buyer most needs to know — that the note's lien is where the seller says it is, and that nothing senior or hidden threatens recovery.
What a title search reveals
A typical search surfaces:
- Current ownership of the property (the borrower) and the deed history
- The note's lien position — is it a true first lien, or is something ahead of it?
- Senior and junior liens — other mortgages, HELOCs, UCC filings, mechanic's liens
- Tax liens and assessments — unpaid property taxes nearly always take priority
- Judgments and other encumbrances against the owner
- Easements, restrictions, and defects in prior deeds or assignments
Why lien position is the headline
For a note buyer, the single most important output is confirmation of lien priority. A note that the seller calls a first lien but which actually sits behind an undisclosed senior mortgage or a large tax lien is worth far less — on default, the senior claims get paid first. The search confirms the investment-to-value analysis is built on the correct lien position. Unpaid property taxes are an especially common surprise, because they jump ahead of even a first mortgage in most states.
Title search vs. title insurance
The search is the investigation; title insurance is the protection. After the search, the title company issues a commitment and, at closing, a policy that insures the buyer (and on a note purchase, the new lienholder) against covered title defects that the search might have missed. Many note buyers require at least an updated search or a title commitment, and on larger deals a lender's title policy, before funding.
What it means for sellers
A clean title search makes your note easy to sell and supports the best price. Before going to market, it helps to know your true lien position and to disclose any senior financing, tax delinquencies, or judgments up front — buyers find them anyway, and surprises erode trust and price. If a curable defect exists (an unrecorded assignment, for example), resolving it early keeps the sale smooth. Mortgage Note Capital orders title as part of standard due diligence, so an accurate picture of your note's position only helps the offer.