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Chain of Title

DEFINITION

Chain of title refers to an official record of ownership that reflects the various title holders of a property or resource throughout its existence. A chain of title is a tool that can be used to trace title transfers. The chain of title is kept in sequential order. In many cases, it is possible to trace ownership from the present property owner to the first title holder. Being able to provide solid ownership documentation is an essential aspect of real estate, so a centralized agency usually maintains title records to ensure that they are accurate and up to date.

EXPLANATION

The chain of title plays an important role in real estate transactions. Title companies utilize the chain of title to research properties that buyers are interested in purchasing. They compile reports that list the title transfers and also alert potential buyers to any existing liens against properties and other encumbrances. After having a full title search done by a reputable title company, many home buyers decide to buy a title insurance policy. Title insurance can help safeguard a buyer from financial losses that may result from an inaccurate title report.

A mechanic’s lien is a lien that commonly stands in the way of a clear title. This type of lien is filed against a property by a general contractor before he or she begins the project. The lien is to guarantee that the contractor is paid for his or her work and should be lifted as soon as the work is completed to satisfaction. If a contractor does not close the lien and report it as being “satisfied,” the lien will stay on the title. A title company will have to ascertain whether it was filed and executed properly and in accordance with state laws, and every state has different laws regarding mechanic’s liens. Liens due to child support that have not been lifted can also create problems as well as liens due to delinquent taxes or late spousal-support payments.

The Torrens title system is an example of one organization that has been formed to record the title histories of individual parcels of property. American insurance companies provide title insurance policies that hinge upon each individual property’s chain of title. Some of these companies maintain their own databases in which they track property titles. Although not nearly as detailed as a chain of title, a property abstract–a summary of a property’s history–is sometimes used to initiate the process of procuring title insurance.

Chain of Title in Different Fields

Chain of title may be most significant in the real estate field, but it also has important applications in other industries. In the film industry, the chain of title helps establish an individual’s level of ownership in a film. A film producer, for example, who stays with an entire film production from the scriptwriting stage all the way to distribution will have a strong claim to proprietary rights as long as he or she has proper documentation.

Chain of title also has significance in creative projects with several different contributors or references drawn from various sources. Chain of title is an essential aspect of the film buying process for film producers and film distributors, because it helps authenticate an individual’s proprietary rights within intellectual property.

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