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What is an Abstract of Title?

An abstract of title is a history of a piece of property.

How Does an Abstract of Title Work?

For example, let's say John Doe wants to buy the house at 123 Main St. As part of the transaction, his title insurance company obtains a copy of the property's abstract of title. They want to make sure that Jane Smith, who is selling 123 Main St., is the legal owner of the property and that there aren't any other claims on the property. The abstract of title shows all of the legal actions related to the property, as well as the names of any entities that have liens on the property and all the previous owners.

Why Does an Abstract of Title Matter?

The abstract of title is a written history of a piece of property and can be fascinating for older pieces of real estate. However, its primary use in most real estate transactions is to ensure that the seller of a piece of real estate is the actual owner of the property and that nobody else is claiming ownership of the property. Title insurance companies, which guarantee that the property is owned by the stated owner, are thus particularly interested in abstracts of title. If they overlook something, they may be subject to paying claims.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.