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 Delaware, an abstract of title is a comprehensive document that outlines the history of a piece of real estate. This includes a record of past owners, the duration of their ownership, and any liens or encumbrances that may affect the property's title. The purpose of an abstract of title is to provide a clear picture of the property's legal background to identify and resolve any potential issues, known as 'clouds', on the title. This document is particularly important for parties involved in real estate transactions, such as mortgagees (banks or lenders) and potential purchasers, as it helps ensure the title to the property is clear before the completion of a sale. While a title report can also be used in the process of acquiring title insurance, it may not be as detailed or exhaustive as an abstract of title. In Delaware, as in other states, the preparation of an abstract of title is typically performed by an attorney or a title company with expertise in real estate law and title examination.