Browse Proptionary encyclopedia

Build your real estate vocabulary to be able to communicate and invest more effectively and professionally.

Certificate of Title

DEFINITION

A document that states all the liens on the property, including the identification of all property owners’s and interest holders. The document does not guarantee accurate title, however it does provide a starting point for accurate ownership. The certificate is issued by title companies to lenders to help lenders determine interest holders of the property, thereby reducing the risk of funding loans to property with clouded title.

EXPLANATION

A certificate of title is an official that displays proof of one’s interest in an asset. In other words it is used to prove evidence of one’s ownership. The certificate of title identifies encumbrances, including liens and easements. Although the certificate does not guarantee good title, it does, however, provide a snapshot of what is believed to be accurate and details the most recent information about the ownership status of a subject property.

Furthermore, when selling a property, the owner is required by law, to assure the other party looking to make a purchase, is aware over the fact the title is not under the claim, control, or authority of any other individual.

Moreover, many lenders may request a certificate of title prior to funding a loan.

Deeds vs Certificate of title

Although deeds and certificates of titles have common similarities in terms of delivering proof as to whom owns and possesses a property, the primary difference between the two is a deed contains information which focuses mostly on transferring real property, while a certificate of title is far more detail oriented, and digs in deeper.

Certificate of title & other areas of use

A certificate of title is used in both real estate and property related matters, but also a variety of different areas such as vehicles, motorcycles, boats, aircrafts, and many other non real estate possessions. Similar to the use of a certificate of title when discussing property, a certificate of title in these other instances are used to determine and confirm the legal owner, as well as to whether or not there are any liens, loans, or other back payments on the certificate of title being dealt with.

Certificate of title & title insurance

Even though a certificate of title is designed to provide proof and further documented evidence when seeking to make a purchase of property in this case, even then one can never be entirely satisfied. Many of these certificate of title documents can in fact be forged, and or be misleading with false information written on the title. In order to prevent and deter such potential unlawful fraud, it is highly suggested the party looking to make the sell further analyze the title by obtaining title insurance.

Title insurance will help defend the individual looking to sell from any future liabilities or legal woes, since in many cases one can never be 100% certain if they obtained a certificate of title from the past which may be altered in an unlawful matter.If this were the case, the current title holder may be held responsible for something they may have been unaware of from the past. Many lenders also gravitate towards this process, for it provides more assurance and guarantee.

[quiz-new]