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Title Abstract[edit]




Introduction[edit]

A Title Abstract is the customary due diligenceinvestigation on real estate made by a party before buying property and/or lending out money with land as collateral, i.e. a mortgage. It is a prerequsite for any substantial, financed transfer of land in modern times. More particularly, it is necessary to obtain a title insurance policy to protect purchasers and lenders against clouded, unmarketable title. Title insurance companies use the abstract to detect issues to list as requirements for the issuance, and exceptions to, its owner's and lender's policies.

Terminology[edit]

A title abstract is also commonly called a "title search" or a "title examination". The former term sometimes means a professional investigation by an insured abstractor, as opposed to a more casual investigation. However, the three terms are used interchangeably in business parlance. A "title opinion" is an attorney's opinion on the legal status of property. As such, only a lawyer can issue a title opinion; otherwise it would be an unauthorized practice of law. A "title report" commonly lists those documents and tax records found in the search. These investigations is used to draft a "commitment" for a title insurance policy, which the parties rely on during the closing.

Why Do a Title Abstract?[edit]

Suppose you wanted to buy a car. Instead of buying a new car retail, you decide to buy a used car from a common consumer. If such an ordinary seller interested you with his car, a savvy buyer would immediately have to resolve several questions: Does the seller in fact own the car? Is he the only owner of the car? Does he have the right to sell the car to you? Has he already sold it to someone else? Is there a lien on the car, which would give a lender the right to repossess it if the lien wasn't paid off? Has the owner paid his taxes, or can the state repossess it after you buy it? Has the owner been sued, which could allow a judgement creditor to seize the car after the sale? Is he bankrupt and unable to transact business? In other words, will you own the car free and clear if you went ahead with the deal?

These issues are compounded when, instead of personal property, someone seeks to buy land. Real estate is typically much more expensive than personal property. Land isn't produced and isn't sold "retail" by an automatically reputable seller. Instead of having a finite past, land is ageless and subject to many more past legal encumbrances, going back decades and perhaps even centuries. Land is not automacally identified and quantified--you can easily tell what car is for sale and how big it is, but the size and location of land, as opposed to neighbor's land not for sale, is not obvious.