I'm talking about the title examination. It's the physical search of the chain of ownership for the house you are planning to buy, and it's the only real evidence you have that the person selling you the house legally owns it.

For example, when you sign a sales contract and agree to buy a house from Mr. Seller, how can you know for sure that he owns the house? Furthermore, how can you know if Mr. Seller has offered the house as collateral for any loans in the past? Finally, how can you find out if Mr. Seller or his property are the subject of any lawsuits or legal judgements?

All of these facts and more are revealed during the title search, and it's simply not safe to buy any real estate without conducting one.

Title is a legal term used to describe the "bundle of rights" that are associated with any property. If you possess those rights, such as the right to possess the property, you are said to be "in title."

The title search in Georgia is performed by an attorney, and details all the changes in ownership with are recorded in the records room of the county where the property is located. The search typically goes back fifty years. In addition, because unpaid property taxes can represent a financial claim against the property, the attorney also verifies that all payable taxes have been (or will be) paid.

You might believe, since most folks are honest, that there's really no need to go to all this trouble. If the seller is telling the truth and signs an owner's affidavit swearing that the title is clean, isn't that enough?

Apparently not. In a recently released survey of the members of the American Land Title Association, title problems were found in 36 percent of all residential real estate transactions. This included new and resale homes as well as refinancings.

As you might expect, the most common title problem encountered centered around obtaining a release or payoff for discovered liens, such as previous or existing first or second mortgages. Often a lender who is paid off will fail to issue a satisfaction or a release, and no one knows about it until the time comes to sell the house. Then the title must be cleared, or the sale can not take place.

The Georgia legislature created a tool to help real estate attorneys clear up title a few years ago. A law was passed allowing a closing attorney to sign an affidavit that a particular mortgage was paid off by that firm in the past. If the attorney's payoff check cleared, then the affidavit can be recorded and used to satisfy past loans that remain on record.

This situation occurs frequently because so many mortgages are sold from lender to lender, and the original files are lost or misplaced.

Other typical problems include liens or judgements against the property for unpaid child or spousal support, outstanding taxes, and other judgements against the property. If a problem is discovered which represents a defect in the title, the seller will have to take whatever steps are necessary to clear that defect.

Also covered in the title search is a certification that there are no unsatisfied judgements against the seller or any previous sellers which were in existence when they owned the property. This certification becomes especially difficult when a seller has a common name, such as John Adams. The attorney must investigate all possible claims against the property.

Once the attorney has cleared any existing title issues, they can issue a lenders title insurance policy, which is required on every new loan originated, even on refinance loans. That title insurance is part of the closing cost and protects the lender, not the owner, from any future claims against the title or challenges to the rightful ownership of the property.

In addition, the closing attorney can now offer the buyer of that property an opportunity to purchase "owners title insurance," a separate policy which is designed to protect the owner and his heirs for as long as they own the real estate. It is important to recognize that the lenders title insurance policy offers the buyer no protection whatsoever. In order to be protected, the buyer must specifically purchase an owners policy.

While most traditional insurance policies charge an annual premium and focus on possible future happenings, title insurance charges a one-time premium to protect you against any problems which may already exist, but are unknown. The fee for title insurance is about two dollars per thousand of purchase price. And because the policy covers your entire period of ownership, you will not need a new policy if you refinance.

The owners title insurance policy also protects the new owner against things which can not be discovered at the courthouse, such as forgery or fraud, and also offers protection against claims due to mis-filed deeds.

Likewise, the policy offers protection against any liens received by the Clerk of Superior Court against your property but not yet posted to the public record for inspection. This period of time is called the gap, and can range anywhere from one to two weeks to as much as several months.

My advice is clear: never buy any real property unless you can also purchase an owners title insurance policy.