What is a Certificate of Title?

Certificates of Title are documents that may be used to establish the current owner of a piece of property. Along with identifying the current owner, the document will also provide other valuable information about the status of the property, including any existing easements or encumbrances on the land and buildings located on the property. Full disclosure of the status of the property on the Certificate of Title can help lenders and potential buyers to be fully apprised of the current situation of the asset, and help them make a decision about whether to move forward with the proposed transaction.

There are several key sections that are often included in the body of the certificate. One section will be devoted to the physical attributes of the property in question. This can include such details as the address assigned to the property, the dimensions of the land, and descriptions of any buildings that are currently established on the property. All the information that is included in this section helps to ensure that there is no miscommunication about the general condition of the property, as well as the physical location of this tangible asset.

Along with providing adequate details about the nature of the property, the document will also provide essential information about the current owner. This will include the name of the registered owner and some sort of identifying information that helps to establish the identity of the person named as the owner on the property title. Depending on the provisions required by local law, there may be other identifying information regarding the owner required as part of the body of the document.

The final key section of a Certificate of Title will detail any and all current claims that are in force against the property. These may include mortgages currently in force, loans that have been taken out by the owner and that use the property as collateral, and encumbrances, such as a tax lien. Generally, the entity that is holding the encumbrance on the property will also be named, making it relatively easy to verify the current status of the obligation.

Title companies may issue the certificate to any lender that requires it as a condition for extending a loan. Often, the title company will research the status of the property to ensure that all information included is the most current, but there is always that chance that a lien or other encumbrance that has been fulfilled and dismissed may still show up in the search. When that is the case, the property owner will need to contact the former creditor and have the information updated or corrected before the encumbrance can be removed.