Explore your mortgage options
Chain of title is the history of ownership of any real property. Each time a property is sold or transferred from one owner to the next, the title, or ownership, of that property is transferred. The record of all those transfers establishes a chain of title.
The concept of chain of title is also used with other types of property, especially intellectual property, such as movies, music and books. Here, we’re going to focus on the relationship between chain of title and real estate and mortgages.
Keep reading to learn how chain of title works, how you can check the chain of title on a property and what to do if you spot a problem.
Chain of Title: What Is It and How Does It Work?
The title to a property tells you who owns a property. And it’s indicated in a legal document known as a deed.
You can hold a title to your home or other real estate or your car or business.
Title documents are typically registered with the appropriate government authority. For real estate, the county recorder usually holds all title documents.
Chain of title shows the history of ownership of a specific property. It starts with the property’s first owner and outlines all transfers of ownership up to the current owner.
Every time a property changes hands and is legally transferred to a new owner, a new title is added to a chain of title.
In every real estate transfer, a title search is completed. A title company researches the entire chain of title to reassure the buyer that the seller owns the property and has the right to sell it.
The title company produces a title report that summarizes chain of title, which might include deeds, death certificates, foreclosure documents and court judgments.
If a title wasn’t properly transferred in the past, its chain of title is broken. Problems with chain of title can result in challenges to your potential ownership, disputes over who owns the property or challenges to the sale of the property.
Purchasing title insurance can help protect you from any issues that may arise due to problems with chain of title.
How Do I Check Chain of Title?
When you purchase a piece of property, a title search must be performed to verify proof of property ownership. Your real estate agent typically gets a title company involved. An attorney can also perform a title search, and some lenders can initiate them.
The goal of the title search is to determine whether there are any judgments, liens or claims against the property that might prevent the transfer of ownership. The title search also looks for any errors in the public record, and it uncovers the property’s history of loans and property taxes.
A variety of public documents are used to verify chain of title, including:
- Transfer documents (including deeds and other conveyances)
- Financial documents (including mortgages and trust deeds)
- Involuntary liens resulting from the property owner’s debts (including property tax liens, creditors’ judgment liens, mechanic’s liens and lis pendens notices)
- Easements (including utility easements, private easements and easements by necessity)
- Covenants and restrictions that limit the use and occupancy of the property or restrict what improvements can be made
- Death certificates (which help show chain of title through inheritance and right of survivorship)
- Correction deeds that amend errors made in older documents
- Other affidavits and documents regarding the property
After completing the title search, the title company creates a title report, sometimes called an abstract of title, to explain its findings.
While it’s difficult for someone without title search experience to gather all the relevant documents, you can search for documents at your local county recorder’s or county assessor’s office.
What Happens if There Is a Break in Chain of Title?
Sometimes a title search reveals there has been a break in chain of title. Often the break involves human error or a lack of proofreading. Common errors in chain of title include:
- Misspelling of owners’ names
- Incorrect legal descriptions of the property
- Deeds with missing required signatures
- Incorrect dates
- Mistakes in filing the deed (including filing in the wrong county)
Any break in chain of title must be corrected. The most common way to do this is to seek what’s known as a quiet title. This involves going to court and having a judge rule that the break in chain of title is irrelevant to the question of property ownership.
Another way to remedy a break in chain of title is to go to the person who caused the break (perhaps by failing to sign a document) and have them sign a quitclaim deed. A quitclaim deed relinquishes the signer’s rights to the property and repairs the break.
How Do I Know if My Chain of Title Is Correct?
You can protect yourself against a break(s) in chain of title by purchasing owner’s title insurance. Not surprisingly, your lender is also likely to want title insurance for their protection.
Title insurance protects against a variety of potential problems with your home’s title, including issues with local zoning laws or ambiguities regarding ownership. Some of the issues title insurance can protect you from are:
- Unknown liens: If your title search failed to uncover unpaid property taxes, mechanic’s liens, unpaid homeowners association dues or unpaid child support payments by a previous owner, title insurance can protect you from having to pay them.
- Fraud: If the seller falsified any documents, you’re protected against claims from the rightful owner.
- Easements and encroachments: Your title insurance protects you against any easements the seller didn’t disclose, including agreements with utility companies, local government or neighbors that could lead to liability disputes.
- Inheritance issues: If a previous owner didn’t properly transfer the property upon inheritance and their heir(s) appear to claim a stake in your home, your title insurance can protect your ownership.
- Errors in the public record: Every transfer of title is subject to human error during documentation and recording. Title insurance protects you against these errors.
Connect the Links
By having each link checked in your future home’s chain of title and buying owner’s title insurance, you can help protect yourself against any future legal issues from mistakes or claims that happened in the past.
If you are unsure about anything that appears in your property’s history, consult your real estate agent and a local real estate attorney to make sure you know your options and the best actions to take.
Take the first step toward buying a home.
Get approved. See what you qualify for. Start house hunting.
The Short Version
- Chain of title tells the entire story of ownership of a home or property
- Chain of title is recorded in a series of documents that trace the transfer of a home or property from one owner to the next
- Owner’s title insurance can help shield a homeowner from any judgments, liens, claims or errors in a chain of title