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 Colorado, an abstract of title is a comprehensive document that outlines the history of a piece of real estate. It includes a record of past owners, the duration of their ownership, and any liens or encumbrances that may affect the property's title. This document is typically prepared for entities with a financial interest in the property, such as mortgagees or potential purchasers, to ensure that the title is clear of any defects or 'clouds' that could affect ownership rights. The purpose of an abstract of title is to provide a thorough background check on the property to prevent future legal issues regarding ownership. It is more detailed than a title report, which is often used in the process of obtaining title insurance. The title report may not be as exhaustive as an abstract of title, as it is primarily aimed at identifying issues that a title insurance policy would cover. In Colorado, title companies and attorneys often handle the preparation of these documents, ensuring they comply with state statutes and regulations.