📝 What is an abstract? And why do you need one?

You’ve heard us talk about abstracts, but chances are if you don’t own a home you’re not sure what this means. So what is an abstract?

An Abstract is a thick bound document (see video above). If you’re a homeowner you probably have stuck in a drawer, filing cabinet or in your bank deposit box. If you’re a homeowner you may have received this at closing, or picked it up a few months after closing.

WHAT IS IT?

An abstract of title is a written chronology of all recorded documents and proceedings related to a specific piece of real estate. It shows the names of all the owners, how long each held title, and what each paid for the property.

The abstract is used for verifying a property’s marketability. The abstract offers assurance that the property is just as the seller represents it, both in the accuracy of its physical description and the integrity of its title.

A classic title abstract goes back in history to the earliest available records—sometimes as far back as the original land grant or patent deed from the U.S. government.

You can find a lot of helpful information in abstract, such as:

• Original land information

• Plat Map

• Lot & Block Diagram

• Subdivision Restrictions

• History of the Property

• Recorded Deed

• Recorded Mortgage

• Legal Actions/Suits Filed
  

WHY DO YOU NEED ONE?

When you own a piece of real estate, it's because someone gave you a deed to it. However, your deed is really only valid if the deed that the seller gave you is valid. Even if her deed seemed valid, an owner 60 years ago could have forgotten about an unpaid mortgage, spoiling every deed since then. Ultimately, when you trade pieces of physical land with pieces of paper, there's a risk of something going wrong. The title process assesses the validity of every owner's right, in the hope of finding an unbroken chain from when the land was first deeded to the time of your purchase.

Once you have given us your abstract we will send to a local title company. The buyer’s lender will then hire a real estate attorney to do a title search of the property in order to make sure there are no issues. This is referred to as the "title search". During the course of review the attorney will be able to see the chain of ownership to make sure the property can convey to the new owner cleanly with a clean and clear title (no tax liens, successions, or other issues). We must obtain “clean and clear” title to close.

We find title issues fairly often - some of these can easily be cleared, some take awhile.

Once your title is found to be clean and clear, the abstractor will update the abstract. The cost to have this done is usually around $450-$500.

FUN FACT - Iowa is only one of two “abstract states” left. This means we’re the only two states who still use physical abstracts. Other states still run title, but they use reports instead.

BOTTOM LINE:

We need your abstract to sell your home. If you can’t find your abstract, let your real estate agent know, they might be able to help you track it down. If you’re planning to list in the next few months start tracking that abstract down now. If you it has to be replaced it can cost between $1,000-$1,200.