Checking a property title before you pay: a buyer's checklist

The most expensive mistake in a property transaction is paying an advance before the title has been examined. Once money has moved, your position weakens considerably. The following is the order in which a title is usually checked.

1. The chain of title

Trace ownership backwards through registered deeds for at least thirty years, or to the earliest available root of title. Each transfer in the chain should be registered, properly stamped and internally consistent as to boundaries and area.

2. The record of rights

Verify the current entry in the land records against the deed. A deed in the seller's name is of limited comfort if the record of rights still shows someone else, and a pending mutation is not the same as a completed one.

3. Encumbrances

Obtain an encumbrance certificate covering the relevant period. Check separately for mortgages, charges created by banks, pending litigation, attachment orders and any notice of acquisition.

4. Statutory clearances

For built property, examine the sanctioned plan, the completion or occupancy certificate, and the current tax receipts. Deviation from the sanctioned plan is a common and expensive problem discovered after purchase.

5. Possession and tenancy

Physically inspect the property. Confirm who is in possession and on what basis. A tenant in occupation may have rights that survive a sale.

6. Capacity of the seller

Confirm the seller is competent to sell — that a power of attorney, if relied upon, is registered and subsisting; that co-owners have joined; that guardianship or probate has been obtained where required.

The cost of a title opinion is small measured against the value of the transaction, and the exercise is worth doing before, not after, an advance is paid.