In a real estate setting, “Chain of Title” means the overall history of the passing of title from the present owner of a piece of real property, all the way back to the original owner. The chain of title is typically maintained and preserved through the use of formal, written documents.
Such documents are usually submitted to a registry office or the county “recorder of deeds”. These offices keep copies of documents that can help establish the chain of title for the property in question. It is important to know the chain of title whenever you are purchasing or selling property, to ensure that your sale or transaction will be valid.
Chain of title may be established through the use of various documents, including:
- Deeds to the property
- Foreclosure documents
- Documents from judgments of distribution
- Documents from judgments to quiet title
- Death certificates from joint tenants and other important parties
- Any other records of transfers of real property titles
Whenever a person buys or sells real property, they need to record that action with the registry office. This will ensure that the chain of title reflects the changes associated with the new owner.
In addition, a purchaser of a home should conduct a title search to determine a few things. First, this will ensure that the party selling the home actually has valid title and is entitled to sell the property. Secondly, it will show whether there are any encumbrances on the land (issues that might restrict the enjoyment and use of the land, like mortgages, etc.)
Chain of title issues can also come into play in the following situations:
- Whenever there are questions as to how the property passed from one owner to another
- Whenever two purchasers are disputing who actually purchased a title first
- Where it is unclear whether the title is marketable
- Where a seller did not actually have legitimate title to a property
- Whenever the validity of a deed or title is in question (“defective title”)
- Whenever another party presents a deed that is outside the chain of title (also called a “wild deed”)
A common situation is where a person contracts to purchase a home, but a third party intervenes and claims the property as their own. The third party may be claiming that the property was transferred to them through a previous owner in a will or a different sale. In this situation, the best step to take is to conduct a title search. This will help settle whether the third party has a valid claim or not.
Searching the title chain can be done by contacting the recorder of deeds for your county or jurisdiction. You should be able to view the chain of title, starting with your own deed, and tracing back to the original owner. The chain of title should reflect the true owner- wild deeds (those not recorded in the chain) are usually not valid. The person who has a recorded deed will generally prevail over one who claims the property without a recorded deed.
Conducting a title search can be confusing and may require the assistance of a qualified real estate attorney. Every state has different recording acts, which basically state the rules for recording real estate transfers. Disputes often arise when one party is from out of state and is not familiar with the recording rules in the new area. Recording real estate documents is one of the most important aspects when it comes to property sales.
Understanding how the chain of title can affect your property is important for real estate matters. If you have any questions, concerns, or disputes regarding chain of title, you may wish to contact a local real estate attorney. Your lawyer will be able to assist you in conducting a title search if necessary, and can represent you in court during a lawsuit.