Definition of Evidence of Title
Evidence of title is a term used in real estate to describe the various documents and records that establish and prove a person or entity’s right to own and convey property. The most common form of evidence of title is a deed, a legal document that transfers ownership from one party to another. Other crucial documents may include title insurance policies, legal descriptions, and historical records.
Key Components
- Deeds: These are formal written documents that transfer ownership of real property.
- Title Insurance: A policy issued to protect an owner or lender against losses due to disputes over the property’s title.
- Title Search: A thorough examination of public records to ensure that the person selling the property legally owns it and that there are no encumbrances, such as liens or claims, against the property.
- Legal Descriptions: Detailed descriptions of the property’s boundaries and location.
Examples
- Deed: Jane purchased a house and received a deed from the seller, which she later stored in a safety deposit box as her evidence of title.
- Title Insurance: George bought a commercial property, and part of his closing costs included purchasing a title insurance policy to protect against unforeseen title issues.
- Title Search: Before finalizing his purchase, David hired a title company to conduct a title search, ensuring clear ownership and identifying any potential issues with the property.
Frequently Asked Questions
What is title insurance, and why do I need it?
Title insurance protects property buyers and mortgage lenders against defects or issues with the property’s title, such as liens or encumbrances.
How does a title search work?
A title search involves investigating the property’s history through public records to verify the seller’s right to transfer ownership and to identify any claims or encumbrances that may affect the property.
What are the different types of deeds?
The most common types of deeds include warranty deeds, which offer broad protection to the buyer, and quitclaim deeds, which transfer the seller’s interest in the property without guarantees.
Can I sell a property without evidence of title?
No, without clear evidence of title, you cannot legally sell a property. Evidence of title proves your legal right to transfer ownership to another party.
How do I secure my evidence of title?
To secure your evidence of title, store copies of deeds and title insurance policies in a safe place, such as a bank vault or secure digital repository.
Related Terms and Definitions
- Deed: A legal document that grants and transfers ownership of real property from one party to another.
- Title Insurance: An insurance policy that protects against losses related to property title issues.
- Encumbrance: Any claim, lien, charge, or liability attached to and binding real property, such as a mortgage.
- Title Search: An examination of public records to determine the legal ownership of property and reveal any claims or issues affecting the title.
- Warranty Deed: A deed in which the seller guarantees clear title to the buyer.
- Quitclaim Deed: A deed that transfers any ownership interest the grantor has without warranties.
Online Resources
- American Land Title Association (ALTA): Provides information on title insurance and the title industry.
- National Association of Realtors: Offering resources for property transactions and ownership.
- HUD’s Title and Title Insurance: Information provided by the U.S. Department of Housing and Urban Development on title and title insurance.
References
- U.S. Department of Housing and Urban Development (HUD) - Title and Title Insurance
- American Land Title Association (ALTA) - Policy Forms & Endorsements
- Cornell University Law School - Legal Information Institute - Deeds
Suggested Books for Further Studies
- “Title Insurance: A Comprehensive Overview” by James L. Gosdin
- “The Complete Guide to Real Estate Finance for Investment Properties” by Steve Berges
- “Title Insurance For Real Estate Professionals” by Andrew L. Houseman
- “Real Estate Law” by Marianne Jennings
Real Estate Basics: Evidence of Title Fundamentals Quiz
### What is a primary form of evidence of title in real estate?
- [x] Deed
- [ ] Lease
- [ ] Mortgage
- [ ] Bill of sale
> **Explanation:** A deed is the primary legal document that provides evidence of title by transferring ownership of real property.
### What is the primary purpose of a title search?
- [ ] To determine property taxes
- [x] To verify legal ownership and uncover any claims or encumbrances
- [ ] To evaluate the property’s market value
- [ ] To survey the property boundaries
> **Explanation:** A title search is conducted to verify the seller's legal right to transfer ownership and identify any claims or issues related to the property’s title.
### Which of the following describes title insurance?
- [ ] Insurance for physical damage to property
- [ ] Insurance for renters
- [x] Insurance protecting against title defects
- [ ] Mortgage insurance
> **Explanation:** Title insurance protects property buyers and lenders against potential losses from title defects or disputes.
### Why might a property buyer require a title search?
- [ ] To obtain a mortgage
- [x] To ensure clear ownership and identify any encumbrances
- [ ] To determine whether the property is in a flood zone
- [ ] To appraise the property’s value
> **Explanation:** A title search is essential to ensure clear ownership and to identify any encumbrances, such as liens, that may affect the property.
### What document might include a legal description of the property’s boundaries?
- [ ] Utility bill
- [ ] Purchase agreement
- [x] Deed
- [ ] Home insurance policy
> **Explanation:** A deed includes a legal description that precisely outlines the property's boundaries and location.
### Who typically issues a title insurance policy?
- [ ] The property seller
- [ ] The real estate agent
- [ ] The municipality
- [x] A title insurance company
> **Explanation:** A title insurance company issues a title insurance policy to protect against title defects or ownership disputes.
### Which term describes any claim, lien, or legal encumbrance pivoted on a property?
- [ ] Deed
- [x] Encumbrance
- [ ] Lease
- [ ] Easement
> **Explanation:** An encumbrance refers to a claim, lien, or legal liability attached to a piece of property.
### What happens if title insurance reveals an issue after the purchase?
- [ ] The property must be reappraised
- [x] The title insurance company covers the losses as per the policy
- [ ] The sale can be nullified
- [ ] The mortgage interest rate must be renegotiated
> **Explanation:** If an issue is identified after the purchase, the title insurance company covers the financial losses according to the terms of the policy.
### What is the difference between a warranty deed and a quitclaim deed?
- [ ] A warranty deed offers fewer guarantees than a quitclaim deed
- [ ] A quitclaim deed is more protective of the buyer than a warranty deed
- [x] A warranty deed guarantees clear title while a quitclaim deed transfers ownership without guarantees
- [ ] Both deeds are the same in terms of guarantees
> **Explanation:** A warranty deed guarantees that the title is clear, whereas a quitclaim deed transfers the seller’s interest without guarantees about the property’s title condition.
### Why is maintaining evidence of title crucial for property owners?
- [ ] It ensures ongoing property tax reductions
- [ ] It provides evidence for future insurance claims
- [ ] It simplifies utility bill payments
- [x] It establishes and secures legal ownership rights
> **Explanation:** Maintaining evidence of title, such as deeds and title insurance policies, is essential for securing and asserting legal ownership rights.
