The terms “title” and “deed” are often used interchangeably, although they are actually two separate things. The “title” to property refers to the legal rights that an owner has over their property. Title rights:
- Give the owner access to the property;
- Allow them to sell or transfer it to other parties; and
- Enable them to enjoy and use the property in any legal way they see fit.
The “deed” is the actual, physical written legal document transferring the title rights. When a party wants to sell or transfer the title to their property, they must create a deed in order to do so. This deed will be handed over to the buyer at the closing sale, who should immediately file it with the office of the county clerk in which the land or real estate is located.
In real estate terms, an abstract of title is an important document detailing the transaction history and any proceedings associated with a specific piece of property. It generally refers to the legal documents containing the history for title, and is essentially a summary of the way that the real estate was owned.
Abstract of title traces the chain of ownership titles from the original owner, through the succeeding owners, up to the present owners. Because the legal history of a property is one of its most important elements, it is a powerful tool for anyone who is considering purchasing a piece of real property.
When buying real estate, you will need to be informed of any potential problems it may have before finalizing the sale. An example of this would be how if there are liens on a home you wish to purchase, you need to know what they are as well as how much is owed.
An abstract of title should detail all types of transactions that were recorded at the county courthouse for the property. Any information that is on record at the courthouse will be on the abstract. For any information that was not recorded, you will need to protect yourself by purchasing title insurance.
Additionally, you should have an experienced attorney read the abstract and note any potential issues; it is important that you do not sign anything until your lawyer reviews the abstract.
What Is Generally Covered By An Abstract Of Title?
Generally speaking, an abstract of title will include records of occurrences such as:
- Tax liens;
- Homeowner association (“HOA”) liens;
- Tax sales;
- Surveys and notes; and
- Easements, and so on.
In order to keep the actual abstract document manageable with such a large quantity of information, it is usually only the most important information on the property that will be pulled from the documents and prepared.
The condensed, or abstract of all the important information, generally summarizes the:
- Original grant;
- Subsequent changes in ownership;
- Whether there are any encumbrances; and also
- A statement regarding its accuracy put forth by the individual who prepared the abstract.
As such, a person who needs to learn more about the history of a piece of property would look to the abstract of title in order to determine such information. This is generally a more reliable source of information than oral accounts of the property’s history.
When Is An Abstract Of Title Used?
An abstract of title is generally consulted or used during a title search. A title search, or a property title search, is a process that reviews files from the county records department in order to see a particular property title’s ownership history. This search is generally conducted by a commercial agent, such as a title company, a real estate attorney, or an escrow officer. The types of records reviewed include, but may not be limited to:
- Court records;
- Name indexes; and
- Property indexes.
To summarize, a title search is used to confirm that the seller is the actual legal owner of the property being sold, and that the title is not clouded by a defect that could reduce the value of the land, or would subject the buyer to some sort of legal liability. Additionally, if a buyer has title insurance, the agent who is conducting the title search will need to determine whether the title insurance company will insure the title as part of the search process.
A title search will also denote whether or not the home has a marketable title, which will be further discussed below.
An abstract title can be used to clear various legal disputes, including:
- Boundary disputes;
- Disputes regarding easements and other encumbrances; and
- Any disputes associated with gifts or similar transfers of title, such as instructions that are mentioned in a will. The abstract of title could serve as a written clarification for various disputes regarding the property’s title.
What Is A Marketable Title?
As previously mentioned, a title is evidence of ownership. When one party sells a piece of real estate to another party, the title is transferred to the new owner. A marketable title is a title that is unlikely to have claims brought against it by an outside party. As such, a marketable title is generally reasonably free of defects and liens, and is unlikely to be subject to a lawsuit.
An unmarketable title to a piece of land may have issues such as:
- Encumbrances on the land;
- Zoning law violations; and/or
- Issues associated with obtaining the land through adverse possession.
Before purchasing a piece of land, you should have evidence of a good, marketable title. It is important to have solid evidence in order to prevent an outside party from attempting to make any claims on your new purchase. Some common examples of evidence of a marketable title include:
- An abstract of title;
- A certificate of title;
- A title insurance policy; and/or
- A warranty of title.
These records and documents identify relevant information, as well as the history of your property. The factual basis of such records generally arise from the examination of a real estate attorney of property records, as previously mentioned. A warranty of title is a solid way of ensuring that a title is good, as the property cannot be sold if there are claims pending.
Title insurance intends to protect a property owner from potential risks associated with the title. An example of this would be how errors or omissions in the property title could create liability for monetary damages resulting from liens or other associated issues. As previously mentioned, it is imperative to perform a thorough title search before purchasing property.
Real estate agents may recommend a title company, however a real estate attorney can perform the same duties. Many real estate attorneys charge less when compared to a title company, and have the necessary legal expertise concerning the settlement.
Do I Need An Attorney For Abstract Of Title Issues?
A local real estate lawyer can help you in many different ways when dealing with an abstract of title. An experienced and local real estate attorney can draft, modify, review, or contest any abstract titles as needed.
They will also be most familiar with any state laws that would specifically apply to your needs. Additionally, they will also be able to represent you in court, as needed, should any legal issues arise.