What is an Abstract of Title?
An abstract of title, or title abstract, briefly summarizes the various activities affecting ownership of a parcel of land. When a person or business agrees to purchase real estate, that person or business arranges for an examination of the history of the property's title. This examination is known as a title search. A title search is conducted to determine that the seller of the property in fact owns the property and has a free-and-clear title. A free-and-clear title has no clouds on it, which means that no person or business other than the seller has an interest in, or claim to, the property.
What is the difference between an Abstract License and Certificate of Authority?
An Abstractor’s License is issued by the office of the OAB and provides an individual the right and authority to perform the duties of an employee of an abstract company. (Licensees must pass a test administered by the OAB, and are required to be under the supervision of a holder of a Certificate of Authority.) Because many Certificate Holders are part of a company that offers other real estate services in addition to abstracting services (primarily mortgage closing and title insurance services), it is common to have non-licensed employees within the company who are not required to be licensed. Activities of a licensed abstractor can include: searching county records, acquisition of county records, indexing, order placement, chaining title, compiling an abstract, preparation of the certificate, pricing and invoicing the customer.
A Certificate of Authority is issued by the office of the OAB, and gives an abstract company the right and authority to be in the business of making and selling abstracts within a specified county, subject to the statutes and regulations governing the industry.
Do I have to have an abstract when I buy or sell property?
There are no state laws that require an abstract in order to purchase real estate, and none that require title insurance when purchasing property. With few exceptions, lenders now require a title insurance lenders policy as a condition of the loan. If no lender is involved in the transaction, buyers and sellers sometimes use an abstract as an alternative to title insurance, in a manner of speaking. Many buyers and sellers in cash transactions feel it is insurance enough to order an abstract, have it examined by a title examination attorney, and clear up any title problems discovered in the process.