An abstract of title—also known as a title examination, examination of title, title abstract, or title abstraction—is the legal history or chronology of a certain piece of real property. For example, an abstract of title includes a history of all the property’s owners, the period during which each owner held the title to the property, and all liens and encumbrances that affect title to the property.
An abstract of title is usually prepared for a mortgagee (bank or lender) or a purchaser of the property and is sometimes used to market the property to a potential buyer. An abstract of title is generally designed to identify and eliminate any clouds (claims) on the title. In contrast, a title report is merely used to facilitate the purchase of title insurance and is sometimes not as complete or reliable as an abstract of title.
In Alabama, an abstract of title is a comprehensive document that outlines the history of a piece of real estate. It includes a detailed account of the property's ownership, the duration of each owner's possession, and any liens or encumbrances that may affect the property's title. This document is typically prepared for entities with a financial interest in the property, such as a mortgagee or a prospective buyer, and serves to identify and resolve any potential claims or 'clouds' on the title. The purpose of an abstract of title is to ensure that the title to the property is clear and marketable. It is more thorough than a title report, which is often used in the process of obtaining title insurance but may not provide as complete a history of the property. In Alabama, as in other states, the preparation of an abstract of title should be done with care, as inaccuracies can lead to legal disputes and financial losses. It is advisable for individuals involved in real estate transactions to work with an attorney or a title company to ensure that the abstract of title is accurate and that any issues with the property's title are properly addressed.