What Is A Chain Of Title In Real Estate?
A chain of title is a series of documents that can be used to back up the current owner’s claim. In the case of homeownership, a deed is used to show current ownership. But the documents within the chain of title should follow an unbroken chain of ownership back to the original owner.
The chain of title documents will include information about any encumbrances, foreclosures and title transfers. All of the documents within a chain of title should support each other. Without consistent recording about the house, the chain of title can get messy.
For example, if someone makes a mistake when recording the deed, that can lead to confusion. The party with a properly recorded deed will have the standing to uphold their claim to the property in question.
If someone ever questions your ownership of the property, the chain of title should be able to indisputably back up your right to the property.
Other Uses For A Chain Of Title
A chain of title is not restricted to usage for physical assets. Although less common, chains of title are important for intangible property, including timber or mineral rights, and intellectual property, including music and film.
For above, the chain of title is critical for buyers to ensure the seller truly has the right to sell the assets in question.