Abstracts and Title Examination

A real estate abstract is an historical summary of the title to a parcel of real estate. The abstract usually includes a chain of title, which describes the sequence of recorded conveyances of the property. A satisfactory chain of title will demonstrate an unbroken line of conveyances, wherein each seller was a former buyer or assignee of the property. This unbroken chain of title will verify that the current seller—owner truly does own the property and has the authority to convey the title.

The abstract will also indicate all other documents recorded upon the property's title. Such items would include mortgages, liens, releases of liens, wills, tax sales, easements, covenants and other encumbrances. The abstract will not go into all of the details contained in those deeds and recorded documents. The abstract will usually just itemize the type of document, relevant parties, dates and amounts.

The most complete abstracts can go all the way back to original granting of the land to an individual by the government. However, most transactions and title abstracts no longer need to go that far, except for only the very largest or most important real estate transactions.

Abstracts are prepared by abstractors, who are usually attorneys, former public officials and, increasingly, title company employees. Abstractors arose and became more prevalent as America's westward expansion began in earnest. Prior to their emergence, most conveyances were simple matters performed at the local courthouse, which usually doubled as the county recorder of deeds. Because there were often few transactions until those early days, many recorders were intimately familiar with the histories of all property transactions in their county. These assurances were usually sufficient to guarantee that the title was marketable.

As the volume increased, that became more difficult if not impossible. Nor was it ever the court's or government's responsibility to provide a chain of title or anything that resembled an abstract. They would only make available for review the recorded documents, as time and personnel allowed.

Abstractors soon emerged to fill the void. They maintained their own abstract records of all properties, and they assigned their employees to perform regular updates. The records that abstractors assembled were often more convenient than having to go down to the records office to research property records. Remember that this was before the time of computers and databases.

Each state has similar "recording acts" governing how documents are recorded into public record, especially real estate documents, deeds, liens and encumbrances . For example, most states will indicate the type of deed required to convey title in common and different circumstances. The buyer (grantee), buyer's attorney or escrow agent will usually provide to the recorder's office the deed used to convey title. This recorder enters a copy of the deed into the public records, making the deed publicly accessible. The original deed is usually returned to the grantee (buyer) or the grantee's attorney. Note that the recorder does not make a judgment as to the validity of the deed or recorded document. The recorder only enters it into public record, regardless of its authenticity or validity. The buyer or grantee would depend on the abstract and related certifications to provide assurances that the deed and title are acceptable and valid.

Buyers and sellers in a real estate transaction would hire an abstract company to provide an abstract that confirms the title being conveyed is clear and marketable. The abstractor would use his records to create an abstract of the subject property; and they might send an employee to the courthouse to conduct a quick review of any current recordings that may affect the title. The abstract would be provided to the buyer's attorney (if any) for examination and opinion.

The abstract usually also includes an abstractor's certificate, which describes what the abstractor examined to develop the abstract.

The problem with abstracts was that they were prone to mistakes and oversights. Although buyers and mortgage lenders depended on abstractors to note any defects or questions that may arise from their examination of records, abstracts did not protect the buyer or assignee from all damages caused by these defects.

The abstractor does have the responsibility to perform the title examination with due care, professionalism and good faith; the abstractor's certificate extends the abstractor's liability only to the work performed. The abstractor will be responsible for missed or omitted records that they should have uncovered. However, the abstractor does not provide any guarantees or opinion about the title itself.

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What You Need to Know About Real Estate

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