The property title is passed upon a successful sale, and, over time, there will be a series of transfers, and different persons (natural or juridical) come into possession of the said property. Therefore, a chain of title is an important document to identify the current property owner down to its original owner, especially if your ownership right is challenged. 

If you purchase a real estate property, the title company will assist you in researching the chain of title. Typically, this document is archived in the local county recorder's office, and you can access it there yourself. However, be mindful of the regulations with regard to recording and accessing a chain of title in your state because the process may vary by locality. 

Understand the importance of a chain of title, how to obtain it, and any vital information you need to know about this document in this blog article. 

Chain of Title in Real Estate

It is essential to differentiate a chain of title from a deed or title to understand what the meaning of the former is. Well, a deed is a document that transfers ownership (title) or interests in a real estate property to another person. 

A title refers to the bundle of rights in a real estate property through which a person may hold an equitable or legal interest. This “bundle of rights” is a collection of legal advantages accorded upon a successful property purchase. To put it simply, a title grants legal rights to a party on how to use and modify a piece of real estate.

The deed and title of the property both have uses with regard to the chain of title. For instance, if the deed contains a typographical error, it could introduce problems with the chain of title. 

Chain of Ownership Documents

The office of public land records possesses chain of ownership documents. Every transfer of property title that is duly registered creates a new link in a chain, leading back to the original owner. 

Homebuyers, real estate investors, and title companies can use these documents to identify the ownership history of a piece of real estate property and unveil any issues that may affect the property or the interest of a future owner in how he might use the same. 

Transfer records, financial records, covenants, restriction declarations, and involuntary liens are examples of chain of title documents.  

Mortgage assignments and deeds are documents under the category of transfer records. A mortgage assignment transfers a mortgage lien’s security interest from one person to another. This document is a valuable tool that ensures a borrower pays his obligation to the appropriate party. Meanwhile, a deed, such as a quitclaim, quits or gives away the previous owner’s interest in the property. 

Financial records, on the other hand, may include voluntary lien agreements, such as trust deeds and mortgages. Such documents function as a lien on the property or afford the debtor legal title rights to it until the obligation is completely paid, in accordance with whether the person lives in a title theory or lien theory jurisdiction.

Covenants and restrictions declaration requires a property owner to refrain from certain activities on the property. It is common in private community associations to have CC&rS or Conditions, Covenants, and Restrictions. Under the authority of the organization, these declarations put limits specific to certain properties. 

How to Get a Chain of Title?

In purchasing a house, the title company usually conducts the title search. This process includes researching the chain of title because such a document confirms ownership, uncovers liens, and guarantees that fines and judgments have been paid. 

There is also a search for existing mortgages on the property. Plus, the title company will do a survey to find or confirm the property lines as stated in the title. After the data gathering, the title company creates a title abstract and a simpler ownership history. An abstract with a clear title means you are to the point of a successful deal. 

Protecting Yourself from Chain of Title Issues

Issues may emerge at any stage of the chain of title research or a real estate transaction. Thus, you should get a chain of title insurance from the title company to safeguard yourself from financial losses if there is a claim at present or in the future. 

Final Thoughts

One of the ways to determine who is the owner of a real estate property is through a chain of title. This document shows the current ownership all the way back to the first owner of a property. It is an essential document when you are buying a property as it ensures that you are in a good deal. The title company can help you in the research of the chain of title.