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Abstract Of Title: The Definition, And Why It’s Important

3-Minute Read
Published on August 31, 2021
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The process of buying a house can be both exciting and daunting. Searching for various houses online, deciding which ones to tour in person and imagining all the ways you might turn a particular house into your family home can be a hopeful and even exhilarating experience.

Once you’ve found the house you want, there are a number of actions to take as you pursue your new dream home. These can include getting an inspection and an appraisal to make sure you don’t run into issues down the road. For instance, finding out that there has been water in the basement and negotiating a solution before you buy would be preferable to discovering it during your morning coffee one week into owning your new home.

Knowing that your home is worth what you pay for it (as determined by an appraisal) helps your lender know the loan they’re giving you is a sound investment. In the vein of avoiding future issues before finalizing your purchase, another important step is acquiring an abstract of title. Let’s take a look at what that means.

What Is An Abstract Of Title?

One of the most significant parts of real property is its legal history. The list that covers this history is called the property abstract. This catalogs the legal activities associated with the property, including deeds, mortgages, litigations, tax sales, title transfers and any encumbrances associated with the property. It also includes a list of all the property owners, how long they owned the property and what happened when it changed hands. The information is then verified by a title abstractor.

This information is very important to have prior to purchasing, and can assure you that the person trying to sell the property really is the current owner and no other parties have a vested interest in the property.

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The Importance Of An Abstract Of Title In Real Estate

Knowing the legal history of a property can ensure you don’t run into a litany of legal issues during and after buying it. There are a number of factors to review, including any of the following:

Knowing these things are there can help you get them sorted before you make an offer on a home.

Even with an abstract of title, you can’t be 100% certain that a property’s legal history is completely accurate. Getting title insurance can ensure that you’re covered if something isn't found before you complete the purchase.

Abstract Vs. Chain Of Title

Similar to an abstract, a chain of title acts as a history of a property’s ownership throughout the years, such as who previously owned it and when. The chain may also be referred to as a title search or title report. Unlike an abstract of title, it’s not a physical document, but a general history of the property and how its title has passed from owner to owner.

Abstract Vs. Torrens

If a property doesn’t have an available or existing abstract of title, it may be what’s known as a Torrens property. The Torrens title system is a procedure of transferring title to land. It was introduced by Sir Robert Torrens in South Australia in 1858. This system was originally based upon the system used to register titles to ships. Later on, the concept of abstract land and title became the prevailing system where, unlike the Torrens system, a title may be affected by liens, mortgages and other interests that aren’t reflected in the original recorded document.

These days, only a handful of states still use the Torrens title system when recording transfers of title.

How To Get Your Abstract Of Title

You can request a copy of your abstract from your title company, but you may find it a difficult read as it is full of industry terminology and legal language. The Title Commitment is generated from that abstract and summarizes the findings in a much more relatable format. At the end of the day, if you have a copy of your title insurance, you may notneed the abstract of title. Otherwise, you can also check with the county recorder’s office as all of this information should be available in public records.

The Bottom Line

An abstract of title is a critical part of making sure you know everything you can about a home before you buy it. Knowing the title history of a piece of property can help you avoid legal issues and other problems down the line, and ultimately assure you that everything about the home you want to buy is as it appears.

To get started on the home buying process, apply today with Rocket Mortgage®.

Apply for a Mortgage with Quicken Loans®

Call our Home Loans Experts at (800) 251-9080 to begin your mortgage application, or apply online to review your loan options.

Start Your Application

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Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.