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What is chain of title in real estate?

IN, Indianapolis, Arts District, Historic area
Barry Winiker/Getty Images
IN, Indianapolis, Arts District, Historic area
Barry Winiker/Getty Images

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When you buy a home, you need a way to prove it’s yours. Enter: the title. This is the legal document that shows you own the property.

A new title doesn’t get created when you buy a house. Instead, the home’s existing title gets transferred from the seller to you. And they got that title transferred to them from the previous homeowner, and so on and so forth. At least, that’s how it’s supposed to work.

Issues can arise during that title transfer process, though. That’s precisely what a chain of title is supposed to track.

What is a chain of title in real estate?

In real estate — as with other types of personal property, like vehicles — the chain of title is the list of all of the historical legal owners, from the first owner to the current one. As Marcus Ginnaty, spokesperson at First American Financial Corporation, explains, “A chain of title is the record of everyone that has held title to, or owned, a home or other specific property over time. Each change in ownership from one owner to the next is a separate link in the chain, from the past up to the present day.”

If you’re buying a home, it’s important for the chain of title to flow through to you, establishing you as the rightful undisputed owner of the property.

The importance of a chain of title

A clear chain of title means that once the seller transfers the title to you, you own the property. This matters for two reasons. First, it ensures that you can live in your new house and make improvements there without any worries. Since you’re the legal owner, it’s your land and abode.

Secondly, chain of title matters when you sell. To legally transfer the title to the next owner, you need to be the current one. A clouded title because of chain of title issues could prevent you from completing the sale.

How a chain of title is established

The chain of title develops through the years. Each time the title gets transferred to a new owner, the chain grows. To add a new “link” in the chain, specific documents generally need to be filed with the appropriate county or local records office.

From a potential homebuyer’s perspective, though, the chain of title is established through a title search. You generally hire a title company for this fairly complicated process that requires digging into records at multiple public offices. The title company then presents you with what’s called a title abstract, which should include any information you need to know about the chain of title.

Common chain of title FAQs

Because chain of title can be a complex issue, it can be helpful to know some key details, like the following.

Written by
Kacie Goff
Personal Finance Contributor
Kacie Goff is a personal finance and insurance writer with over seven years of experience covering personal and commercial coverage options. She writes for Bankrate, The Simple Dollar, NextAdvisor, Varo Money, Coverage, Best Credit Cards and more. She's covered a broad range of policy types — including less-talked-about coverages like wrap insurance and E&O — and she specializes in auto, homeowners and life insurance.
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