Understand the purpose: An abstract of title is a summary of the history of ownership and encumbrances on a piece of real estate. Its main purpose is to disclose any potential issues that may affect the title to the property.
Review the basic information: Start by reading the first few lines, which typically include the property address, the names of the current and previous owners, and the date of the abstract.
Identify the chain of title: The chain of title is the sequence of ownership transfers that have occurred for the property. Look for the section labeled "Chain of Title" or similar, and review the names and dates of each owner.
Note any encumbrances: Encumbrances are legal claims or interests that affect the property, such as mortgages, easements, or liens. Look for a section titled "Encumbrances" or "Liens," and carefully read the details provided.
Review the closing: This section typically includes information on the current status of any open mortgages, taxes, or other financial obligations related to the property.
Look for exceptions: Some abstracts may include a section titled "Exceptions" or "Exclusions," which lists any issues or defects in the title that are not covered by the abstract. Read this section carefully to understand any potential risks associated with the property.
Verify the accuracy: It's important to note that abstracts of title may contain errors or omissions. To ensure the accuracy of the information provided, consider obtaining a full title search from a reputable title company.
By carefully reading and understanding the abstract of title, you gain valuable insights into the ownership history and legal status of the property, helping you make informed decisions during real estate transactions.