Title Abstract and Examination

Title to property evolves over a period of time with each recorded document becoming a permanent part of the chain or history of a title. The history is created in part, by a series of instruments being recorded in the land records of the jurisdiction in which the property is located. A deed is a written document that creates an interest in property. When recorded, the deed puts the world on notice of the estate ownership thereby created.

While a deed shows evidence of ownership of an interest in property, it is not a complete history of the title to the property it conveys. To learn the history of a property and see how it may affect the current ownership, it is necessary to conduct a thorough examination of the title.

The first step in examining a title is to have a title abstract prepared. Abstracting is the process of establishing a chain of title to a property by locating the deed of the current owner and then researching backward and forward in time through the land records to determine what, if any limitations there may be to the ownership, use and enjoyment of the property.

In conjunction with a search of the land records, the abstractor also reviews court dockets to determine if any of the prior or current owners of the property were involved in legal proceedings that could affect title to future owners. In addition to the land and court records, assessment records must also be checked to find out the status of taxes and other municipal fees that can be levied against property.

Today, most lenders require that improved properties be surveyed. Typically, the lender requires a "location" survey as a means of verifying that everything evaluated by the appraiser is within the boundary lines of the property, and that none of the improvements violate building setback lines or easement areas. In addition to the location of improvements, the survey is a means of determining physical encumbrances that are not recorded. The remarking or staking of property lines is not part of a "location" survey; thus, if a purchaser wants to have the boundary lines marked, a boundary survey would be necessary.

Once an abstract is completed, it is submitted to a title examiner for review. The examiner reviews all of the documents reported by the abstractor to evaluate their legal sufficiency and whether or not they still affect current and/or future owners of the property. The examiner then reports the findings in a summary format that outlines what limitations may apply and what remedial steps may be necessary before the owner can convey marketable title. Such remedial steps range from the payment of taxes to the filing of a court suit to quiet title. Based on this final report, the settlement agent prepares a title insurance binder, which outlines the scope and limitations of the title insurance coverage.