When you purchase a piece of property, you naturally want to know that you have a good title to it, meaning that you and you alone own the premises. Purchasing title insurance during the real estate buying process is one way to safeguard against possible claims by others who may say they actually own the property. But what does the title insurance company rely on to protect its own interests? The answer may be an abstract of title.
What an abstract contains
TheDataAdvocate.com, an online resource for news and commentary relating to real estate and its continuous changes, explains that an abstract of title is a written document that contains a chronological summary of the ownership changes the property has undergone, often clear back to the original land grant or patent deed.
This summary likely will include the following that pertains to the property:
- Will bequests
- Judicial proceedings, including lawsuits and tax sales
- Recorded liens, encumbrances and easements
- Names of all recorded owners, the length of time each held title, and how much each owner paid for the property
- Outstanding mortgages
- Plat map(s) of the property’s block and lot
What an abstract does not contain
An abstractor can find only information that is of public record and that affects the property’s title. Consequently, an abstract cannot contain such things as the following:
- Unrecorded easements
- Unpatented mining claims
- Taxes and assessments not yet due
- Possible governmental zoning restrictions
- Waiver rights
While no state requires an abstract in order to effect a legal property conveyance, many mortgage lenders require one, as well as a title report and a lender’s title insurance policy, before they will make a loan on the property. Inquiring further from a real estate professional – or real estate attorney who knows the laws – is recommended for issues pertaining to specific property or circumstances.