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 New Jersey, an abstract of title is a document that provides a detailed history of the legal ownership and claims on a specific piece of real estate. It includes a chronological list of all previous owners, the duration of their ownership, and any liens, encumbrances, or legal issues that may affect the property's title. This document is essential in real estate transactions as it helps to ensure that the title to the property is clear and can be transferred without any legal disputes. It is typically prepared for the benefit of a potential purchaser or a mortgagee to identify any potential issues, known as 'clouds', that could affect the ownership of the property. The preparation of an abstract of title is a thorough process that may involve examining public records, deeds, court records, and other documents to compile a complete history of the property. While a title report is also used in the process of acquiring title insurance, it may not be as comprehensive as an abstract of title, which is specifically designed to uncover any and all issues with the property's title.