Why Is the Abstract of Title Important to Realtors?

Realtors sell properties for a living. That’s simply understood, but it's a far more complex process beneath the surface. The market determines much of their pricing, they need willing buyers, and they need to know the true value of the property itself, all things considered.

That last point is where the title search plays a role. It chronicles the ownership history of a property by sifting through all associated legal documents and public records on file—revealing a clean chain of title or any related issues.

These findings are summarized in the title abstract, reviewed by an attorney or title examiner in some states, and provided to the parties involved in the transaction. It’s important to note the title abstract does not guarantee a clean title (title insurance policies come into play here)—but only summarizes the status. Nor is it the same as a title report—the document that enables the purchase of title insurance.

The title abstract is relevant to realtors because it helps them close a transaction. Otherwise, there’s room for negotiation or, worse, the buyer or seller to back out of the sale.

What Realtors Hope to See in an Abstract of Title

In short, realtors hope to find a clean chain of title.

What does that mean, exactly?

It’s easier to explain this in a negative sense. A title search reveals the seller’s claim to title. If legitimate, and cleared by the inquiry, they have a right to sell the property. If not, they don’t, and can’t, at least not before resolving existing issues.

A clean abstract impacts everyone involved: the seller, the buyer, and the realtor. They move onto closing other tasks, such as readying insurance policies, and completing the transaction. Realtors focus on their next property, buyers move in, and sellers get peace of mind: a win, win, win.

Issues That Could Appear on an Abstract of Title

Let’s first say issues with title are rare for private properties. Homes change hands every few years in some cases, not long enough for major problems in regards to title to occur. After all, each transaction requires an independent search.

That doesn’t mean they don’t arise—even on brand new homes—because searches cover the entire history of the ownership of a property, not just the buildings on it.

Such matters disrupt a realtor’s goal. The price they had in mind might not be relevant if expensive fixes are required. They also open the door for further negotiations or, worse, the buyer to back out of the transaction.

What issues might disrupt a transaction? They range in seriousness, for lack of a better word. Forgeries, illegal deeds, or impersonation of a previous owner are criminal acts that, if discovered, would appear on an abstract of title. Any liens against the property would be a point of negotiation—the parties involved would discuss to whom the costs should fall.

Then there are things like easements and boundary disputes that have ramifications for the buyer and affect the sale, even if they don’t require a monetary remedy. Essentially, the buyer may not be able to manipulate the property as they intended: adding an extension to a home, building a shed out back, or digging a pond, for example.

That’s important information for the realtor to know and understand. In fact, whether it reveals a clean claim to title or problematic concerns, the abstract of title is something realtors should prioritize as the closing date approaches. In doing so, they can communicate more effectively and enjoy a smoother transaction.