What is Chain of Title in Real Estate?
What is Chain of Title?
In real estate, the “chain of title” is the recorded history of who has owned a particular property over time. It includes all the documents, transfers, and legal proceedings affecting the property’s ownership—such as deeds, mortgages, wills, and court judgments. By examining the chain of title, buyers, lenders, and title companies can confirm whether the current owner has clear and marketable title (meaning no unresolved claims or liens) and can legally transfer the property to a new owner.
Chains of title typically address:
- Recorded History: The chain of title is typically found in public records, often maintained by a county’s recorder or clerk’s office.
- Verification: Title companies and real estate professionals review the chain of title to ensure no undisclosed issues—like outstanding liens or ownership disputes—exist.
- Transfers and Encumbrances: Every event that impacts ownership (transfers via deed, mortgages, tax liens, court rulings, etc.) will be part of the chain.
- Importance: A clear and verified chain of title protects a buyer from future legal challenges or financial obligations related to the property’s history.
Example of Chain of Title
Imagine a house that was first deeded to John Thompson in 1970. Over the years, here’s how its chain of title might look:
- Initial Owner (1970):
- Deed from the subdivision developer to John Thompson.
- Recorded at the county clerk’s office on March 15, 1970.
- Subsequent Transfer (1980):
- John Thompson sells the house to Sarah Lee.
- A new deed is recorded on April 2, 1980.
- Sarah Lee’s mortgage (if any) is also recorded, indicating the bank’s lien on the property.
- Inheritance (2000):
- Sarah Lee passes away and leaves the home to her nephew, David Lee, through her will.
- Probate court issues an order transferring title to David, recorded on May 10, 2000.
- Mortgage Refinance (2005):
- David Lee refinances the mortgage.
- A new mortgage document is recorded on March 1, 2005.
- Final Sale (2020):
- David Lee sells the home to Maria Perez.
- A new deed is recorded on October 15, 2020, transferring ownership to Maria Perez.
- The existing mortgage is paid off at closing, and a new mortgage for Maria is recorded.
When you look at each of these ownership changes and recorded documents, you’re seeing the property’s chain of title. Any prospective buyer or lender would review this chain to confirm it is free of defects—such as disputed inheritances, forged deeds, unpaid liens, or errors in documentation—before proceeding with a transaction.
