An abstract of title summarizes and documents ownership events related to a specific piece of real estate. It will generally include records and information for at least the past 50 years of land ownership. An abstract will also set out limitations or claims to the property, including easements, loans, mortgages, liens, real property taxes, and more.
Having a full abstract is necessary for obtaining title insurance when you purchase a property. However, many buyers and sellers will only do a “limited certificate of title,” which covers a period of fewer than 50 years, depending on what the buyer or seller needs. Sometimes lenders or developers will require this document before they will lend money or do any work on a property.
Why Is an Abstract of Title Important?
Title to a piece of real property establishes rights in land. When someone has complete rights in land, they have ownership of:
- The mineral rights below
- The air space above
- Waters contained or flowing through the land
- The right to build or create a property on the land
There are all kinds of potential rights in land, from liens to estates that you can only have during your lifetime (and cannot pass down to heirs). Having a full abstract will help you determine whether you or someone that currently owns a piece of property has a “good and marketable title” in the land. This type of title is free of legal defects.
What Type of Information Is Contained in the Abstract of Title?
The abstract of title will (or should) contain literally every transaction or occurrence that took place that affects the land. One of the most common examples in residential property is that you have a mortgage on the home.
When you purchase the property, you finance all or a portion of it with a bank or other financial institution. That bank, then, takes an interest in the property so that if you default on your payment, they can take the property and sell it to make up the difference of what you owe. That type of transaction would be included in the abstract of the title. It will also note when you paid off the property, and the mortgage was removed.
The purpose of having all of this information is for other potential sellers and others who want to put a lien on the property. By looking at the abstract, other people can see how much interest you really have in a piece of property. When you win a personal injury lawsuit, for example, you may need to put a lien on someone’s property to ensure that you collect the money that is owed to you.
The abstract of the title will also include information regarding:
- Restrictive covenants that spell out how you can and cannot use the land or property
- Condominium declarations and agreements that describe obligations related to condo-living
- Easements that indicate where a prior owner gave someone else rights to pass through, over, or under the property (usually for a fee)
- Liens for unpaid obligations usually include mechanics’ liens, mortgages, and tax liens (for unpaid tax bills)
- Notices of pending litigation that might affect the property, such as divorce proceedings or bankruptcy
How Does the Abstract Affect Transfer of Property?
Any transfer of property creates rights in a property, but it may also include obligations, too. You can transfer property through several means in Georgia—and all of these have to do with the title in the real estate. The various type of title transfers (deeds) include:
- A warranty deed includes promises relating to the title. Although it technically does not warrant that the title is fair and marketable, it does state that the seller will defend your rights in the property if someone else challenges the title
- A limited warranty deed is similar to a warranty deed, except that it limits the extent that they will defend the deed (such as against particular classes of people or claims)
- A quitclaim deed is a transfer deed that does not provide any warranties—it merely transfers any and all rights that the seller had in the property to the next person
- An administrator’s deed appears when someone is appointed by the court in a probate action to transfer property to an heir or someone else. If there’s a will involved, then the deed’s formal name changes to an “executor’s deed” to account for the fact that it’s an executor, not an administrator who makes the transfer
If you have a dispute that affects someone’s property, particularly incidents like slip and fall or negligent security, John Foy & Associates can help. Fill out the form to your right, or call us at 404-400-4000 to get your FREE consultation today.
