Search report ensures clear title

Scanning through and understanding a property’s documents is a complex process. A purchaser should go thorough a host of documents to trace the ownership of the property. Although you can make an initial review of the documents, it is better to have them checked by a legal expert. Legal experts are more aware of the local laws, rules and regulations.
Legal experts are better placed to review and give an opinion on the status of a property. Getting a legal opinion on the property’s status is an essential part of a property purchase process. With property acquisition being a complicated process, with many laws and regulations in place, it is necessary to have a proper legal opinion on the status of the property.
A legal opinion covers details of the status of the property such as:
Who is the legal owner of the property What has been the chain of holdings and transfers over a period of time Whether the property is free from encumbrance Whether the property has been offered as a security for a loan Is there any dispute on the ownership of the property Whether the transferor or seller has complied with all the requirements to get ownership of the property Whether the transferor or seller is competent to transfer the property
The legal expert may be asked to prepare a search report. The search report traces the history of the property - who were the original owners of the property and how it has moved hands over a period of time before reaching the present seller. It also traces any charges or encumbrances created on the property and their present status - whether the charges have been satisfied and the property has been released or if there are some charges pending to be satisfied.
This search on the title of the property is prepared for a period of the last 30 years. It is good if a seller annexes a copy of this report with the ‘Agreement to Sell’. This document states whether the title to the property is clear, marketable and free from encumbrance. In other words, it states whether or not there is any existing mortgage, litigation, condition or claim, which is likely to affect the title of the buyer adversely.
In order to avail a housing loan, one of the preconditions is that the title of the property should be clear and marketable. ‘Clear and marketable’ means the seller should be genuine and the actual owner of the property. Further, the property should not be under any dispute or litigation. The search report certifies that the seller of the property is genuine.
A search report can be obtained from an advocate who will conduct a survey of the title of the property by visiting the office of the registrar. Such an opinion reduces the chances of getting into a legal dispute at a later stage and stops one from getting caught into a fraudulent or disputed transaction.
The cost of obtaining such an opinion is not very high. It generally depends on the nature of the work to be done. Considering the amount of investment involved, this cost constitutes a small part of the transaction. In case you are getting the property purchase financed by a bank, then generally, the bank obtains a legal opinion before sanctioning the loan. Banks have their own legal experts who specialise in this. Usually, the cost is nominal and is built into the processing and administration charges charged by the bank for sanctioning and disbursing the loan.