Title abstracts and reports are crucial components of the title search process in real estate transactions. They provide a summary of what the title search uncovered regarding the history of a property. This article will delve into the purpose and importance of title abstracts and reports, how to create and interpret them, and their role in the closing process.
A title abstract is a condensed history of the title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.
On the other hand, a title report is a document that outlines the current status of a property’s title. It includes information about the property’s ownership, any liens or encumbrances on the property, and any other issues that might affect the title.
Both these documents are crucial as they provide a clear picture of the property's history and any potential issues that might affect the transfer of the title. They are used by title insurance companies to determine whether or not a property is insurable.
Creating a title abstract involves summarizing all the relevant documents found during the title search. This includes deeds, wills, and legal proceedings, among others. The abstract should include the following key components:
A title report is typically divided into three sections: the ownership history, the tax information, and the list of liens and encumbrances. When reading a title report, it's important to carefully review each section to understand the current status of the property's title.
Any issues identified in the title report, such as unpaid taxes or liens, need to be addressed before the property can be transferred. These issues are often referred to as "clouds" on the title.
The title abstract plays a crucial role in the closing process of a real estate transaction. It provides the buyer, seller, and lender with a clear picture of the property's title history.
The title abstract is used by the title insurance company to determine whether or not to issue a title insurance policy. If any issues are identified in the abstract, they must be resolved before the closing process can proceed.
In conclusion, understanding title abstracts and reports is crucial for anyone involved in a real estate transaction. They provide a comprehensive overview of a property's history and any potential issues that might affect the transfer of the title.