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 Vermont, 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 legal status of the property and to identify any potential issues ('clouds') that could affect the transfer of title. It is typically prepared for parties with a vested interest in the property, such as a mortgagee or a prospective buyer, to ensure that the title is clear before proceeding with a transaction. Vermont law requires that any defects or clouds on the title be disclosed and addressed before the sale of property. While a title report can also be used during the process of purchasing title insurance, it may not be as detailed as an abstract of title, which is why the latter is often preferred for its thoroughness in verifying a property's title history.