Understanding Home Title Abstracts: A Comprehensive Guide

A home's title is composed of a chain or collection of ownership documents, such as older deeds and land surveys, that trace its ownership history. The deed and title serve as proof of ownership. A home's deed is usually a single document. The documents that comprise a property's title, however, can make examining ownership difficult. You can generate a title abstract by referencing a home's title chain.

Uses for Title Abstracts

A home abstract is also known as an "abstract of title" or "title abstract." Title deeds, mortgage notes, property tax records, property liens and land surveys may comprise a title chain. Together, these legal documents make up the home's title. A title abstract itself serves several practical purposes. As a buyer, you can use a title abstract to discover liens and undisclosed owners of a home you want to purchase

Finding Unknown Liens

When you use a mortgage to buy a home, the lender requires a title search and reviews the title abstract before approving your loan. Title searches sometimes reveal potential problems, such as old, unpaid liens, which hinder the transfer of a clean title to the buyer. Liens on a home's title are encumbrances or "clouds." Clouds become the responsibility of the new owner, unless paid off, or cleared, before the sale is complete. An abstract lists the liens on a home's title.

Competing Ownership Claims

A home accumulates many title documents over time. Public documents that make up a home's title also may reveal competing ownership claims. A deed that grants ownership to the owner-of-record, or seller, for example, may compete with a previous quitclaim deed that transferred title to a different owner. Title abstracts list competing ownership claims, although some deeds may go unrecorded or become lost. If unrecorded, the title abstract may not fully disclose all ownership details.

Researching Title

The county recorder or county land office generally maintains the property records that make up your home's title. A home's title is also public record, which anyone can research. Real estate investors frequently conduct their own title searches and prepare title abstracts. Mortgage companies and homebuyers usually hire title companies to search titles and produce the abstract.

Title Insurance for Protection

Title abstracts aren't perfect, therefore, title insurance helps protect your home's title against competing ownership claims. As a homebuyer with financing, mortgage lenders require you to purchase owners title insurance. Owners title insurance covers you as long your or your heirs own the home. You also have to purchase a lender's title insurance policy with the lender as beneficiary. You or the seller may pay the one-time policy premium at closing.