FAQ Title Examination

The Chain of Title is the chronological history of all recorded transfers of a property. Think of it as a genealogical tree for a piece of land. Each “link” in the chain is a deed or a legal transfer from a “Grantor” (seller) to a “Grantee” (buyer).

If a link is missing, for example, if a previous owner died and their estate was never properly probated, the chain is considered “broken.” A broken chain of title creates a cloud on the title that must be resolved, often through a Quiet Title Action, before the property can be sold or insured.

A Cloud on Title refers to any document, claim, or unreleased lien that invalidates or impairs the owner’s title to a property. Common examples include:

• Unpaid property taxes or utility liens.
• Recorded mortgages that were paid off but never formally released.
• Easements that were not properly documented.
• Pending lawsuits (Lis Pendens) involving the property.

During the examination, these clouds are identified in a Title Commitment or preliminary report. Most must be cleared (resolved) before a lender will provide a mortgage or a title insurance policy is issued.

In the United States, title records are maintained at the county level, usually in the County Recorder’s Office or Clerk of the Court. The U.S. uses a “race-notice” or “notice” system, depending on the state.

These systems reward the first person to record their interest in a property. Recording a deed provides “constructive notice” to the world that you own the land. If a buyer fails to record their deed and the previous owner sells the land again to a second buyer, the second buyer might legally own the property if they were unaware of the first sale.

An Abstract of Title is a condensed, written history of all recorded instruments affecting a particular tract of land. It includes a summary of all deeds, mortgages, wills, and legal proceedings that have touched the property over time.

While abstracts were the standard in the past, they have largely been replaced by Title Insurance in modern residential transactions. However, in many rural areas or for complex commercial deals, an attorney still reviews an updated abstract to provide a formal “Title Opinion.”

While often used interchangeably, they are distinct steps:

• Title Search: The physical or digital gathering of documents from public records (deeds, tax records, court filings).
• Title Examination: The legal analysis of those gathered documents.

The examiner looks for technical defects, such as a signature that wasn’t properly notarized, a legal description with a typo (e.g., “North” instead of “South”), or a failure to waive dower or curtesy rights by a spouse.

An encumbrance is any right to or interest in land which may exist in third persons, to the diminution of the value of the land. The most common type is an easement.

An easement gives a person or entity the right to use part of the land for a specific purpose, such as a utility company running power lines or a neighbor using a shared driveway. During an examination, these are identified so the buyer understands they cannot build structures over utility lines or block a neighbor’s access.

A lien is a financial claim against a property used as security for a debt. If a lien is “attached” to the property, it “runs with the land,” meaning the new owner could be held responsible for the debt if it isn’t cleared at closing.

Common liens found during examination:

• Mechanic’s Liens: Filed by contractors who weren’t paid for work on the home.
• Judgment Liens: Resulting from a court ruling against the owner.
• Tax Liens: Filed by the IRS or local government for unpaid taxes.

A Title Commitment is a document issued by a title insurance company stating that they are willing to insure the property, provided certain requirements are met. It is the end result of the title examination.

The commitment is divided into schedules:

• Schedule A: Lists the basic facts (owner, price, legal description).
• Schedule B-1: Lists the “Requirements” (liens that must be paid, deeds that must be signed).
• Schedule B-2: Lists “Exceptions” (items the insurance will not cover, like existing easements).

Even the most thorough examination can miss “hidden defects” that do not appear in public records. These include:

• Forced or fraudulent signatures on past deeds.
• Undisclosed heirs of a previous owner.
• Mistakes in the public record itself.

Title Insurance protects the owner and lender against financial loss from these hidden risks. While the examination finds the “knowns,” the insurance policy protects you from the “unknowns.”