What Is an Abstract Of Title?

Abstract of title is a record of the title history of a property or other significant asset, including transfers, liens, and legal actions that are connected to the property. This document is crucial for purchasers or investors of a property as a summary of a title’s status to ensure clear title and to validate its provenance.

Key Takeaways

  • Whenever a property or other asset is sold, the title is transferred to the buyer. The abstract of title records that transaction history and provides an official provenance.
  • The abstract of title will also record outstanding liens against the property, back taxes owed, or unresolved building code violations.
  • Some states have adopted an alternative titling process, known as Torrens, which do not have official title histories but rather rely on physical transference of title certificates without the official recording of a deed.

Understanding Abstracts Of Title

An abstract of Title is is the brief chronological overview of all of the historical legal documentation associated with a property or asset, 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.

Unless it is unavailable for a property for some reason, prospective buyers should obtain a copy of the abstract of title prior to negotiating a purchase. 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. Since property transactions are reported to the county recorder, these municipal 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

In the U.S., it is common practice for properties and transactions to be registered through county recorders, which are then subsequently traceable through abstracts. There are some exceptions to this rule, however. When researching the history of a property a buyer may discover that an abstract is unavailable or incorrect; this often means that the property is considered to be "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.