What Is an Abstract of Title in Real Estate?

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A property's legal history, as recorded in the property abstract, is vital to understand before purchase.

The abstract contains a list of all documents associated with the real property, such as deeds and mortgages, along with information about former owners and when they owned the property.

As a legal attorney with years of experience working in real estate, I'm here to tell you everything you need to know about title abstracts.

Quick Summary

Protecting your property investment worth $100,000 or more is essential.
Title searches help you avoid hidden liens and legal issues.
A title search is required for most home purchases.
It is a critical step for securing title insurance approval.

What Is an Abstract of Title?

The abstract of the title is a document that summarizes all changes to the title of the property over time, in other words, its general history.

It includes the land records, legal activities, initial grant deeds, every instance in which the property's ownership, and other key details like tax liens against it [1].

You can find it with the county recorder, reviewed by the public records.

An abstract provides you with information about the property you're interested in purchasing, such as whether there are any claims against it. It's commonly used to help people decide if they want to make an offer to their real estate agent on a piece of land or a house.

Abstract of Title vs. Title Search

A title search only gives you a decade-long overview of the property's history. In contrast, an abstract of the title shows you the legal documents that include the entire history from when it was first recorded as land that someone owned.

Here’s a detailed comparison table for Title Search vs. Abstract of Title:

Feature	Title Search	Abstract of Title
Cost	$75-$150	$200-$400
Time Span	Covers the past 10 years of property history	Includes the property's full ownership and legal history, dating back to its original recording
Detail	Provides a summary of recent ownership changes, liens, and encumbrances	Offers a comprehensive record of all legal documents, deeds, mortgages, liens, and transfers
Purpose	Suitable for quick checks or informal reviews	Necessary for in-depth legal reviews and title insurance issuance
Insurance	Not sufficient for obtaining title insurance	Required for title insurance to protect against future claims
Legal Weight	Limited; may miss older issues or disputes	Comprehensive; includes all historical legal documents
Risk Level	Higher risk of missing historical problems (e.g., undisclosed liens or boundary disputes)	Lower risk due to thorough documentation of property history

Key Takeaways:

A title search is quicker and more affordable but provides limited insight into a property's history. It’s ideal for buyers who want a basic overview without incurring high costs.
An abstract of title, while more expensive, is essential for ensuring the property's legal history is clear. It is required to obtain title insurance, which offers greater protection against potential legal disputes or claims.

For buyers making significant investments or purchasing older properties, opting for an abstract of title is often safer and more reliable.

The Components of an Abstract of Title

An abstract of the title can be a comprehensive document, depending on the land's history. This information will normally include specifics about the first deed and all prior sales (for example, transfers) if this information is obtainable.

Also, it will summarize the following:

1. Property Title

Purpose: Establishes legal ownership of the property.
Common issues: Unclear ownership, multiple claimants.
Required documentation: Original deed, transfer documents.
Warning signs: Gaps in ownership history, conflicting claims.
Resolution steps: Conduct a thorough title search and resolve disputes through legal channels.

2. Initial Grant Deed

Purpose: Documents the original transfer of land from government to private ownership.
Common issues: Missing or incomplete records, especially for older properties.
Required documentation: Original land grant, survey records.
Warning signs: Inability to trace ownership back to the original grant.
Resolution steps: Consult historical records and seek a professional title researcher.

3. Liens

Purpose: Identifies any claims against the property for unpaid debts.
Common issues: Undisclosed liens, expired but unremoved liens.
Required documentation: Tax records, court judgments, mortgage documents.
Warning signs: Recent financial troubles of current owner, multiple refinances.
Resolution steps: Negotiate lien payoff before purchase and obtain lien release documents.

4. Encumbrances

Purpose: Reveals restrictions or claims on the property that may affect its use or value.
Common issues: Easements, covenants, right-of-ways.
Required documentation: Deed restrictions, homeowners association documents.
Warning signs: Unusual property configurations, shared driveways, or access points.
Resolution steps: Review all encumbrances, negotiate removal, and adjust purchase price.

5. Conveyances

Purpose: Tracks all transfers of ownership over time.
Common issues: Missing transfers, improper documentation of sales.
Required documentation: All deeds, including quitclaim and warranty deeds.
Warning signs: Gaps in ownership timeline, deeds with missing signatures.
Resolution steps: Locate missing documentation, potentially requiring quiet title action.

6. Legal Actions

Purpose: Identifies any past or current lawsuits involving the property.
Common issues: Boundary disputes, construction defects, environmental issues.
Required documentation: Court records, settlement agreements.
Warning signs: Multiple legal filings, unresolved court cases.
Resolution steps: Consult with legal counsel to resolve all legal actions before purchase.

7. Back Taxes Owed

Purpose: Reveals any unpaid property taxes that could lead to a tax sale.
Common issues: Delinquent taxes, tax liens.
Required documentation: Tax assessor records, lien certificates.
Warning signs: History of late payments, current owner financial distress.
Resolution steps: Require tax payoff at closing and obtain a tax clearance certificate.

8. Unresolved Building Code Issues

Purpose: Identifies any violations of local building codes or zoning laws.
Common issues: Unpermitted additions, zoning violations.
Required documentation: Building permits, inspection reports, zoning records.
Warning signs: Recent renovations without proper documentation, complaints from neighbors.
Resolution steps: Require the seller to resolve code issues and adjust the purchase price to account for necessary repairs.

By thoroughly examining these components, potential buyers can identify and address issues before completing a real estate purchase, thereby avoiding unexpected legal and financial liabilities.

5 Common Problems Found in an Abstract of Title

An abstract of title often reveals several issues that can complicate property transactions.

Here are some of the most frequent problems:

Undisclosed Liens

Example: A previous owner's unpaid property taxes resulting in a tax lien
Consequence: The new owner may become responsible for settling the debt

2. Boundary Disputes

Example: Overlapping property claims due to poorly documented boundaries
Consequence: Legal disputes with neighbors and potential loss of land

3. Missing Heirs

Example: An unknown heir emerges to claim inheritance rights after a property sale
Consequence: Ownership disputes and potential invalidation of the sale

4. Forged Documents

Example: A fraudulent deed transfer using a forged signature
Consequence: Legal proceedings to establish rightful ownership

5. Tax Problems

Example: Underpayment of taxes or late filings by previous owners
Consequence: The new owner may inherit tax liabilities and face penalties

These issues can significantly impact property rights, complicate sales, and lead to financial and legal consequences for buyers and sellers. Conducting a thorough title search and obtaining title insurance can help mitigate these risks.

When Do You Need an Abstract of Title?

You need an abstract of the title when purchasing a property, especially if you're getting title insurance.

Your lender will also require an abstract of the title to ensure there are no outstanding claims against the property that could jeopardize their investment.

Use this information to know what to expect when you're buying a home. An abstract of the title assures you that you can take ownership of the property without any legal or financial problems.

You may also be warned about an issue that's better fixed before taking on the property.

The abstract of title will also record outstanding liens against the property, back taxes owed, or unresolved building code violations
- James Chen, Investment Advisor

How Do You Write an Abstract Title?

To write an abstract title, you should :

Start with the current owner's name and address
List all of the prior owners of the property in chronological order, including any transfer ownership
Include a description of the property, including any easements or rights of way
Describe any liens, encumbrances, or other claims against the property
Summarize any legal actions involving the property
List the date and amount of all sales of the property
Include any other relevant information about the property's history
Have the physical document notarized by a Notary Public

You can get an abstract of a title from a title company. These businesses have employees called abstractors trained to understand all the previous property transactions you need to know.

If you're getting title insurance, your insurer will require an abstract of title that meets their standards. Be sure to check with them before ordering an abstract of the title to identify any title defects and avoid any legal issues later on.

Related Article:

Top Warning Signs in an Abstract of Title

Reviewing an abstract of title is a critical step in any property transaction. Identifying potential red flags early can save you from legal disputes, unexpected costs, or fraudulent activity.

Here are the most common warning signs to look out for:

Gaps in Ownership History: What’s Missing?

Unexplained periods where property ownership is unclear can be a red flag for undocumented transfers or potential claims. These gaps may arise from poor record-keeping or intentional concealment and could result in legal complications.

Why It’s a Concern: Gaps can lead to disputes if someone later claims rightful ownership.
What to Do: Investigate these periods thoroughly with the help of a title company or legal professional.

Unexplained Transfers: Is Something Fishy?

Frequent or rapid ownership transfers with no clear purpose could indicate fraudulent activity. These transactions may hide the true owner or obscure a property's history.

Signs to Watch For:
- Multiple ownership changes within a short time.
- Transfers that seem illogical or unnecessary.
Action Steps: Scrutinize these transactions and consult a professional for further investigation.

Missing Signatures: A Paperwork Nightmare

Deeds or other critical documents without proper signatures can render property transfers invalid. These issues may stem from negligence or intentional omissions.

Why It Matters: Missing signatures can cloud the title and make future transactions difficult or impossible.
How to Spot It: Verify all required signatures are present and authenticated before proceeding.

Irregular Legal Descriptions: Boundaries That Don’t Add Up

Discrepancies in how property boundaries are described across various documents can lead to conflicts with neighboring property owners.

Common Issues:
- Inconsistent measurements or unclear boundaries.
- Vague or outdated legal descriptions.
Proactive Measures: Work with a surveyor or legal expert to resolve discrepancies before closing the deal.

Unresolved Claims: What’s Still Lingering?

Outstanding liens, judgments, or other unexplained circumstances can severely impact a property’s marketability.

These include:

Examples of Common Claims:
- Unpaid property taxes.
- Unreleased mortgages.
- Pending lawsuits or mechanic’s liens.

Solution: Always request a title search to uncover unresolved claims and ensure they’re cleared before finalizing the purchase.

By paying attention to these red flags during an abstract of title review, you can prevent future legal headaches and secure a clear title.

If you notice any of these issues, consult a title professional or attorney to address them promptly and safeguard your property investment.

FAQs

Is an Abstract the Same as a Deed?

An abstract is not the same as a deed. A deed is a legal document that transfers ownership of real property from one person to another. An abstract summarizes the legal history of a piece of property.

What Is the Purpose of the Abstract Title?

The purpose of the abstract title is to provide a summary of the legal history of a piece of property. This information can help determine if there are any outstanding claims against the property or identify any potential problems with the property before purchase.

Is an Abstract of Title a Legal Document?

An abstract of the title is not a legal document. It is a summary of the legal history of a piece of property.

Which Is More Important, Title or Deed?

The title and the deed are both important because they each play a role in the home-selling process. For example, during a title search, not only can ownership be confirmed, but the title search will also reveal any liens, loans, or property taxes due.

Why Is an Abstract of Title Important?

An Abstract of Title is important because it provides a comprehensive review of the property's history, ensuring there are no legal issues or claims that could affect the current or future ownership.

How Does an Abstract of Title Differ From a Title Insurance Policy?

An Abstract of Title differs from a Title Insurance Policy, since it provides a historical record, whereas a Title Insurance Policy offers protection against future claims or defects not found in the abstract.

Who Prepares the Abstract of Title?

The Abstract of Title is prepared by an abstractor or title company, professionals trained to research and compile property records.

What Should You Do if There Are Issues Found in the Abstract of Title?

If issues are found in the Abstract of Title, you should consult with a real estate attorney or title professional to resolve any discrepancies before proceeding with the property transaction.

Schedule a Consultation With a Real Estate Attorney

If you are buying a new property and want an abstract of title, you should consult with a real estate attorney. They will be able to give you the proper tax advice and help you understand the process, and ensure that everything is done correctly.

Contact Schmidt & Clark, LLP for a free consultation with one of our top real estate attorneys. We have experience with a wide range of real estate transactions and can help protect your interests.

Reference:

https://www.law.cornell.edu/wex/abstract_of_title

What Is an Abstract of Title? Everything You Need to Know