Definition: Abstract of title
A summary of recorded transactions concerning a particular property.
A brief history of the titles for a piece of land. The abstract of title lists all of the legal actions that have been performed or used in conjunction with a piece of property. This is used to determine whether or not there is any kind of claim against a property.
How abstract of title works (example):
For example, let's say Maria Smith wants to buy the house at 567 Washington St. As part of the transaction, his title insurance company obtains a copy of the property's abstract of title. They want to make sure that Maria Smith, who is selling 567 Washington St., is the legal owner of the property and that there aren't any other claims on the property. The abstract of title shows all of the legal actions related to the property, as well as the names of any entities that have liens on the property and all the previous owners.
Why abstract of title matters?
The abstract of title is a written history of a piece of property and can be fascinating for older pieces of real estate. However, its primary use in most real estate transactions is to ensure that the seller of a piece of real estate is the actual owner of the property and that nobody else is claiming ownership of the property. Title insurance companies, which guarantee that the property is owned by the stated owner, are thus particularly interested in abstracts of title. If they overlook something, they may be subject to paying claims.
More Questions on Mintrates: