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 Michigan, an abstract of title is a document that summarizes 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 purpose of an abstract of title is to provide a clear picture of the property's title history, ensuring that there are no 'clouds' or disputes over ownership that could jeopardize a transaction. It is typically prepared for parties with a vested interest in the property, such as a mortgagee or potential purchaser, to confirm the property's title is clear before proceeding with a mortgage or sale. In Michigan, the preparation of an abstract of title is often performed by title companies or attorneys specializing in real estate law. It is a critical step in the due diligence process and is used to ensure that the title to the property can be transferred free and clear of any issues. Unlike a title report, which is primarily used for obtaining title insurance and may not be as detailed, an abstract of title provides a thorough historical record of the property's title.