An abstract of title is a written chronology of all recorded documents and proceedings related to a specific piece of real estate. It shows the names of all the owners, how long each held title, and what each paid for the property.
The abstract is used for verifying a property’s marketability. The abstract offers assurance that the property is just as the seller represents it, both in the accuracy of its physical description and the integrity of its title.
The classic title abstract goes back in history to the earliest available records—sometimes as far back as the original land grant or patent deed from the U.S. government.
The abstractor of title is the person who researches this history, summarizes the relevant documents, and certifies the binder as true and complete.
Who Is the Abstractor?
The first abstractors were attorneys. Today’s abstractor studies under an experienced abstractor and may be licensed by the state. For example, an Oklahoma abstractor is licensed by the state board.
In other states, an attorney who earns a commission on the title insurance product is the same person who prepares the abstract.
Today’s abstractors typically research a property by searching county records and by using records already stored in their abstract plants—sites managed by title-insurance companies to hold copies of documents. Counties typically store their records by year. A property’s complete title history may be contained by numerous record books, and is time-consuming to find. (That said, expect the process to evolve as real estate market data generally becomes more accessible and high-tech.)
The abstractor must have sharp analysis skills. Abstractors must recognize which documents could be erroneous or void. For example, an abstractor in Ohio might find a recent transfer on death deed. The provision of the Ohio Revised Code that governs the deed requires the grantor to file an affidavit with the county prior to death. If the deceased did not record the legally required affidavit before death, the abstractor must determine that the deed is void and that the real estate remained vested in the grantor’s estate.
What Else Does the Abstraction Process Uncover?
A seller could be asked to produce an abstract to uncover any interests others might have in the property, or whether some unknown party could have reason to challenge a buyer’s ownership. Thus, the abstractor is responsible for finding all major transactions and legal issues, and for including:
- Mortgages and liens. Liens for property taxes, mortgage loans, homeowners’ association dues, or any other lenders’ interests must be resolved or good title could be destroyed.
- Subdivision and homeowners’ association restrictions. The buyer needs to know what can and cannot be done with a property.
- Lot and block diagrams; plat maps.
- Surveys. Any encroachments, such as fences over the boundary, should appear in the surveyor’s notes.
- Easements. Right of ways or utility access can create areas the buyer is restricted from fencing off or developing.
- Pertinent wills, deeds, lawsuits, or tax sales.
Once the abstractor finishes, a title company has a comprehensive summary of the condition of the title, and can insure it accordingly.
How Does an Abstract Differ From a Title Report?
A recorded property deed specifies on its face whether it is recorded with the county recorder or the office of the registrar. If it is the registrar, and the deed is kept through a torrens system, there is no abstract. In this case the court issues a Certificate of Title.
No state requires an abstract to effect a legal property conveyance. Yet lenders nationwide do make loans contingent on a title insurance report. In some states, a title insurer prepares (and is responsible for the accuracy of) the report, which is treated as tantamount to an abstract. The abstract, though, is designed to rule out any clouds on title. In contrast, the title report simply enables the purchase of title insurance. This runs the risk over simply “insuring over” the title defects.
On the other hand, it is possible that defects in title may escape the abstractor’s attention. Title insurance protects the buyer, and is normally available based on a cost-effective title report through which the title insurer inspects the title’s condition. The insurance covers resolution costs for unknown defects covered by the policy.
Another process that applies in some states is the 40-year search. Information gleaned from this process can serve as the basis for title insurance. For example, Ohio’s marketable title provision states that “any person claiming an interest in land may preserve and keep effective the interest” by filing a notice for the record “during the forty-year period immediately following the effective date of the root of title of the person whose record title would otherwise be marketable.” In some states the marketable title act could require checking back over a different term of years.
Who May Obtain an Abstract of Title?
Abstracts, or updated abstracts, are expensive, bound documents. The real estate attorney who certifies a title orders and obtains them.
Yet, assuming an abstract exists, anyone may read most documentation it contains at the county courthouse.
Many people do this when researching history of genealogical or architectural significance. For example, a researcher may wish to nominate a property to the National Register of Historic Buildings. The abstract may reveal connections with significant historical figures, and the early names of a property as well as the construction and renovation dates.
For ordinary properties, the county recorder of deeds can tell the seller if an abstract is available, based on the property’s legal description.
Regardless of whether a state has a reputation as an “abstract state,” every state requires an expert review of a title’s history. Therefore, a title report and an abstract of title will include much similar information.
Which is needed? Check the state’s marketable title provision, local custom, and the underwriter’s insurance requirements.
In any case, a title’s quality must be rigorously assessed.
And the chronology of a place continues.