What Buyers Should Know About Chain of Title

Visit us on the web

By Barbara Pronin

‘Chain of title,’ as real estate professionals know, refers to the history of a property’s ownership as far back as records can trace it.

In some cases, a property’s chain of title may go hundreds of years, back to when the government first granted the right of ownership of the land, by way of Patent - and perhaps the home’s first owner. Today, when a new buyer closes, and the paperwork is filed with the local office that handles real estate records and filings, the new owner’s name will join that chain.

As the new owner, buyers need to be sure that any liabilities carried by the seller are resolved at closing and will never become a burden to them. They should know that the title or closing office will do everything possible to ensure that any such liabilities have been satisfied before the transaction is complete.

But while many buyers are aware that, as the new owners, their home loan will show on title, they may not know what other information is available or how it is displayed - such as zoning restrictions or municipal ordinances – or in the case that if the home is a condominium, the homeowner association’s governing documents will also be listed.

Unpaid property taxes will show up on title, as well as home equity lines of credit, and mortgages that have been paid off. Filings like these remain on title as a historical record of what has happened to the property over the years.

At the same time, some things may not show up on title - state or federal income tax liens, for example, or even some judgments - so even if buyers check the land records to see what shows on title, they may not know about everything.

That is one of the reasons why most buyers purchase a title insurance policy; to protect themselves and their lender against anything potentially harmful that was not disclosed on title at closing. The owner’s policy purchased in addition to the lender’s policy ensures that the title company will take financial responsibility in the event that the seller had undiscovered liens. Policies like these provide coverage, protection and peace of mind.

Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice. The material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy.

Click on any icon below to share this article:

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.