Abstract Of Title In Real Estate: The Basics

A home that’s been around a while can have a deep history, and knowing that history is an important part of buying a home. If a home has changed ownership frequently throughout its life or has any legal claims against it, you’ll want to be made privy to it before finalizing your purchase, or you may potentially face legal issues down the road.

To avoid these issues, a home buyer should request an abstract of title, which breaks down the full legal history of a property based on public records. Let’s take a closer look at what an abstract of title is, what’s included and how to obtain one.

What Is An Abstract Of Title?

An abstract of title, or property abstract, is a collection of legal documents detailing the history of a piece of real property and any legal claims against it. The abstract catalogs all legal activities associated with the property, including deeds, mortgages, litigations, tax sales, title transfers and encumbrances.

The abstract of title also includes a list of every property owner, how long they owned the property and what happened when the property changed hands. A title abstractor then verifies the information.

The Importance Of An Abstract Of Title In Real Estate

The information that a property abstract can give you is important to have prior to making a purchase. It can assure you that a property has a clear title, free of any liens or claims, and that the person trying to sell you the home is the current owner.

Knowing the legal history of a property can also guarantee you won’t have to deal with any title issues during and after the transaction.

What’s Included In An Abstract Of Title?

Here’s a list of items that an abstract of title will typically show:

Knowing these items are there can help you get them sorted before you make an offer on a home. If a property’s history is clean, that’s known as a clear title.

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 you’re covered if something isn’t found before you complete the purchase.

How To Get A Copy Of A Property Abstract

If you’re interested in how to get your abstract of title, consider using the key steps described below as a guide.

1. Request A Copy

You can request a copy of your abstract from your title company, but you may find it a difficult read because it’s 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.

You can also check with the county recorder’s office since all of this information should be available in public records.

2. Pay A Fee, If Needed

Depending on whether the abstract of title needs to be updated or a new one must be created, the title company will charge you a fee. If you’re only updating the abstract of title, fees can range anywhere from $300 – $500. If the title company has to create a new abstract of title, the cost can be upward of $1,000.

Contact your title company to see what the exact cost of updating or creating a new abstract of title would be.

3. Obtain Your Abstract Of Title

Once you pay any necessary fees, you’ll be able to receive your abstract of title. Take a moment to look over the document and note any issues, such as liens, encumbrances or encroachments. If you have any questions about your property abstract, you can reach out to a real estate attorney.

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, and 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.

Abstract Of Title Vs. Other Types Of Titles

An abstract of title isn’t the only title used in the real estate industry. Let’s take a look at some related titles you may come across.

Abstract Of Title Vs. Chain Of Title

Similar to an abstract of title, a chain of title acts as a history of a property’s ownership throughout the years. This includes who previously owned the property and when. Unlike an abstract of title, a chain of title isn’t a physical document but a general history of the property and how its title has passed from owner to owner.

The other major difference is that, while mortgage lenders don’t require an abstract of title, they’ll often require that a buyer have a title search done as well as purchase title insurance.

Abstract Of Title Vs. Torrens Title

If a property doesn’t have an available or existing abstract of title, it may be what’s known as a Torrens property, Torrens title or Torrens certificate. The Torrens title system is a procedure of transferring title to land. Originally based on the system used to register titles to ships, it was introduced by Sir Robert Torrens in South Australia in 1858.

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 not reflected in the original recorded document.

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

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. Being aware of the title history of real property can help you avoid legal issues and other problems in the future, and it canultimately assure you that everything about the home you want to buy is as it appears.

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