What is an Abstract Of Title
Abstract of Title is the summarized history of all of the titles, transfers and legal actions that are connected to a property.
BREAKING DOWN Abstract Of Title
Abstract of Title is is the brief historical overview of all of the historical legal documentation associated with a property, including titles, transfers and claims against the property. Typically, an abstract of title for a property will begin with the initial grant deed, and include all subsequent changes in ownership as well as any additional claims, including easements, encroachments, encumbrances, liens, litigations, restrictions and tax sales. This document is crucial for investors as a summary of a title’s status.
Unless it is unavailable for a property for some reason, prospective buyers should obtain a copy of the abstract of title prior to negotiating for ownership. Similarly, property owners should maintain a copy of the abstract of title for their properties, as these documents can often be incredibly costly to replace. As a result, many property owners will store such documents in safe deposit boxes as a preventative measure against theft or fire.
Any owner who does not have access to their abstract of title can work with a title company or the county recorder with jurisdiction over the property to obtain the abstract, or to recreate the abstract. Ordinarily, since property transactions are reported to the county recorder, these agencies are key in recording and researching title histories.
In some cases, an owner may instead rely on the Owner’s Policy of Title Insurance in place of the abstract of title to perform the same function.
Abstract of Title and Torrens Titles
Within the U.S., it is common practice for properties and transactions to be registered through county recorders, and subsequently trackable through abstracts. There are some exceptions to this rule, however.
Upon researching the history of a property, a buyer may discover that an abstract is unavailable, and this often means that the property is instead considered Torrens. A Torrens property will not have an abstract of title.
Torrens refers to a 19th-century system of transferring land, which is handled through the court system. Named for Australian economist and politician Robert Torrens, this system was initially implemented to simplify the system of land transfers through registering title deeds through the state, and to resolve the inadequacies of the preceding property registration systems . While the Torrens system was adopted by many U.S. states around the turn of the 20th century, today only a few states maintain Torrens title systems to monitor property transactions.