Simply defined, the chain of a title is the story of a house. It includes who built and owned it first, who bought it later, and who owned it each time it was sold up to the present day. This also applies to undeveloped terrain. In real estate, a “chain of title” is the sequence of historical transfers of title to a property. In this essay, we will look at a chain of title search in real estate, an example, and how to obtain a chain of titles.
For a variety of important reasons, real estate and land ownership have historically been meticulously recorded and safeguarded. A chain of titles is crucial to the wealth and productivity of nations from a broad and collective perspective; because it helps people to thrive and grow with the confidence that the land they work; live on is truly theirs while they own it.
Otherwise, who lives where and who owns what would be akin to the wild west. Land ownership has always meant both an aristocratic position and tax responsibility. It aids in the definition of individual upward mobility; acts as the foundation for their need to pay taxes that benefit society as a whole.
Confusion over property rights can cause conflict between individuals and place a strain on nations’; other smaller communities’ abilities to serve their inhabitants. As a result, the major goal of creating a chain of title in real estate is to eliminate misunderstandings regarding property rights at all costs.
What Is Chain of Title?
A “chain of title” is a search of real estate records that lists the successive owners of a home or property. A chain of title search is performed to guarantee that the home or property is free to be transferred to a new owner via a chain of title.
The search includes tracing the ownership title back to the original owner and confirming the title is free of any lien; judgments, foreclosures, or other encumbrances that would impede the transfer of title to a new owner.
During a real estate transaction, a title company or abstractor will investigate the chain of title on the buyer’s behalf. The chain of title is a term used by real estate experts to refer to the process of studying the chain of ownership on a title of a home or property.
Following the completion of the chain of title search, the abstractor or title company will typically produce an abstract of title or preliminary title report; which is a written description of all the recordings related to a home or property title.
Abstractors and title businesses use numerous documents related to the home or property to verify the chain of title. They use any foreclosure records, death certificates from joint tenants, quiet title judgments, or other property deeds.
The search normally begins at the county recorder’s office in the county where the property is located. The registrar of deeds retains copies of all the documents that establish the chain of title; beginning with the initial owner of the property.
How Does a Chain of Title Work?
The chain of title is both useful and necessary in the real estate industry. When a transaction in this sector is desired; the buyer’s title business provides him or her with all relevant information on the chain of title. This is done to avoid incidents of property transfer fraud and fraud. In this situation, the title firm aggregates all transactions that have occurred on the asset into a title report.
They also face any financial losses caused by mistakes in the report if the buyer has title insurance. The Torrens title system is one of many registration systems developed to track title records; reports of possession of various sectors of real estate properties. Some title companies keep private records of property transactions in addition to the federal report, although in other circumstances; the chain of title is contained in an abstract of title, which is normally signed by an attorney, but not always. When the ownership of an asset is transferred; insurance companies in the United States are obligated to provide title insurance on the chain of title.
One of the reasons for the lack of transparency in the chain of title during that time period was the usage of the Mortgage Electronic Registration System (MERS); which was largely used in 1995. Lenders and creditors depended on this firm to hold their titles in order to avoid the expenses; problems associated with local government property transfers. This is because the firm permits mortgage liabilities to be exchanged without requiring the exchangers to file a property transfer report. This conduct has sparked outrage in several parts of the United States; there have even been some legal measures taken against it.
Chain of Title Real Estate
A deed is a written statement that conveys title (ownership) or interests in real estate to another person. A chain of title is a grouping of rights in real estate in which a person has a legal or equitable interest. The term “bundle of rights” refers to a set of legal benefits awarded to a real estate buyer that covers all they may and cannot do with the property as the owner.
In terms of the chain of title, each of these documents works together. A typo in the registration of a deed, for example, could cause serious problems with the chain of title; because, in most cases, the person who has a correctly registered act will triumph over; the person who claims the property without one.
Chain of Title Search
A title firm will frequently request a chain of title search when you buy a home.
The chain of title is explored as part of this process to verify ownership and identify liens. Liens are legal claims on assets that allow the holder to have access to the property if obligations do not appear to be paid—more on that later.
It can also be used to ensure the payment of judgments and taxes. The title company will investigate any mortgages secured on the property and conduct a survey to determine the physical boundaries; which will be reported in the title.
Title firms develop something called a title abstract after compiling all of that information, which may be a shortened history of the title. If the abstract shows a clear title, the sale is set to go and you’re on your way to the closing table!
Components of a Chain of titles Search
A chain of title search often includes the following information:
- A duplicate of the current vesting instrument
- A catalog of ownership transactions, with dates and instrument numbers, dating back to 1940.
- Report summarizing the parcel number(s) and a brief legal description (s)
It should be noted that a chain of title search may necessitate an abstract of all accessible data on a property for the past 70 years or more. Furthermore, the report may necessitate sifting through deeds, easements, mineral rights, and use limitations (to name a few).
While most county courthouses collect and organize papers in accordance with industry standards that evolved over time, each county office has its own eccentricities.
Chain of Title Example
A title search undertaken on a property under contract to develop a multi-tenant retail building is one example of a chain of title Hogan has come across. The outcome demonstrated that an easement could not be built on or paved over. This restriction was imposed as a result of a discovery in the chain of title that revealed the easement belonged to another property owner.
“As a result, the buyer was unable to use the property for its intended purpose, and the contract was terminated,” Hogan explained.
How to Obtain a Chain of Title
When you buy a house, a title company does a title search. As part of this procedure, the chain of the title search is checked to validate ownership, find liens, and guarantee that judgments and fines have been paid.
The title company will also search for existing mortgages on the property and conduct a survey to determine the property’s geographic boundaries, which will be documented in the title. After gathering all of this information, title companies provide a title abstract and a simplified title history. If the abstract includes a clear title, the sale is complete, and you’re nearing the end of the transaction.
How Do I Know if my Chain of Title is Correct?
The title company will do everything possible to ensure that there are no clouds on the title before you close on a property, but issues can always arise in the future. There is considerable risk involved, as with any investment. And, like many other large investments—a car, a boat, etc.—insurance for your title is available.
Property claims can happen at any time, and having title insurance from your title firm will protect you from financial loss due to missing or future claims. More specifically, title insurance will protect you from court expenses and any other financial loss caused by the claim, based on the exact requirements of your policy. This is not to say that a claim will never result in the loss of your home, but it is extremely rare if you have title insurance.
A chain of title is a legal document that establishes legal ownership of an item or piece of property. Titles exist for assets such as homes, land, various types of property, vehicles, and private property like jewelry.
Titles also reflect ownership of other types of property, such as businesses and any assets associated with an operation.
These titles are important because they help in tracing initial ownership to present ownership; which aids in avoiding conflicts or problems that may occur in establishing legal ownership and/or future concerns with selling the property.
Frequently Asked Questions
What is a chain ownership?
The same media corporation owns multiple outlets in a single medium, such as a newspaper chain, a series of radio stations, a string of television stations, or various book publishing enterprises. In India, chain ownership is usually associated with newspapers.
What is the chain of title quizlet?
A detailed history of all recorded occurrences impacting the property’s title.
Which best describes a chain of title?
Which of the following BEST defines the title chain? It is a record of all documents and legal actions pertaining to a single plot of land.
How will you check the chain of a property?
How to Check the Title Chain of Your Property
- Select “Property Records.” “on the left side
- Select “Owner Name.” “in the center of the page
- Enter the homeowner’s full first and last names as they appear on the deed.
- Locate the homeowner’s name in the property records and click on the Parcel Number.