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 Texas, an abstract of title is a document that provides a summary of the legal history of a piece of real estate. It includes a comprehensive list of previous owners, the duration of their ownership, and any liens or encumbrances that may affect the property's title. The preparation of an abstract of title is typically done to ensure that a potential mortgagee or purchaser is aware of any issues that might affect their interest in the property, such as outstanding claims or legal disputes, which are referred to as 'clouds' on the title. The purpose of an abstract is to clear any such clouds before a transaction is completed. While a title report can also be used during the process of purchasing title insurance, it may not be as detailed or exhaustive as an abstract of title. In Texas, title companies often perform title searches and issue title commitments and policies that are based on the findings of these searches, which serve a similar purpose to an abstract of title by disclosing the status of the title and any defects that need to be addressed.
