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What is chain of title?

| May 4, 2021 | Real Estate Transactions |

When you purchase real estate, you need to ensure that the title is clear so you don’t have to fight a battle over whether the property is rightfully yours or not. Your real estate attorney is a great help with this because they can review the chain of title and ensure that everything is accurate.

Titles and the history of the title are kept by the appropriate authority. Each time the property is sold, the transaction details are recorded. It’s typically done with a government entity. However, the Mortgage Electronic Registration System (MERS) is sometimes used. This had led to objections and lawsuits from the government because it’s a third-party system that isn’t making the registration changes with the government authorities.

Why is chain of title important?

The chain of title is the only way to ensure that all previous claims for ownership on the property have been taken care of and that there aren’t any encumbrances. It’s possible to get title insurance, which offers financial protection in case there are errors in the title.

When problems are found with a title, they may have to be cleared up through the court. It can be a lengthy and costly process in some cases.

Does chain of title have other uses besides real estate?

Other forms of property and even businesses can have a chain of title. If you’re considering making any purchase of property that has a title, having your attorney review the chain of title is important. This helps ensure that you’ll be able to have the title transferred to you without any issues and that you’ll have the protections that a clear title provides.

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