Guide to Examining a Chain of Title and Property Taxes

The chain of title is the historical sequence of conveyances and other recorded documents affecting ownership of a parcel of real property. Examining confirms the seller’s right to convey marketable title and reveals any defects or clouds that might affect ownership or financing.

Purpose of Chain of Title Examination

• Verify the current owner(s) of record.
• Identify all prior owners and transfers to establish legal ownership continuity.
• Detect encumbrances, liens, or claims that could cloud title.
• Confirm absence of gaps or breaks in ownership that might cause title disputes.

Steps to Examine Chain of Title

a. Property Identification: Start with a legal description and the property’s parcel identifier (PIN or tax parcel number). Obtain the most recent deed or title commitment showing current ownership.

b. Search Public Records: Search the Grantor-Grantee Index. Search all possible name variations: include alternative spellings, initials, aliases, and business entity names. Search deeds, mortgages, liens, easements, wills, probate records, and court judgments affecting the property.

c. Trace Ownership Back in Time: Work backward through recorded instruments to trace ownership transfers, ideally going back at least 30 years or as required by underwriting standards. Verify dates of conveyance and proper recording of documents.

d. Analyze Documents for Title Defects or Clouds: Look for unreleased liens, missing successors in title, forged signatures, or erroneous conveyances. Identify encumbrances like easements, covenants, restrictions, or judgments. Confirm that chains do not break due to missing conveyances or invalid transfers.

e. Special Considerations: Check for concurrent ownership types (joint tenancy, tenancy in common, tenancy by entirety) and understand survivorship rights. Identify if title is held by an entity (LLC, corporation, trust) and obtain proper corporate documentation or trust certifications. Be aware of state-specific recording laws and requirements for constructive notice.

4. Finalize Chain of Title Examination: Compile a chain of title report summarizing all documents, ownership history, and any exceptions or concerns. If gaps or risks exist, recommend curative actions (e.g., affidavits, quitclaim deeds, releases). Confirm that the chain of title supports marketable title for conveyance or financing.

Importance of Tax Examination

Property taxes are a senior lien on real estate and always take priority over most other liens. Ensuring that taxes are current and properly assessed is crucial for clear title and to avoid unexpected tax sales or penalties.

Sources for Tax Information

• County Assessor’s Office: Provides tax assessments, parcel numbers, and valuation details.
• County Treasurer or Tax Collector: Handles tax payments, delinquencies, and redemption rights.
• Tax Records Online: Many counties maintain online databases with tax payment histories.

Key Tax Elements to Examine

a. Tax Parcel Identification, verify the property’s Parcel Identification Number (PIN) or Tax ID matches the legal description.

b. Tax Assessment and Valuation Review ,the assessed value of the land and improvements. Confirm classification of property for tax purposes (residential, commercial, agricultural, etc.). Identify special assessments or district taxes (e.g., school, flood control, sanitation).

c. Tax Payment Status, confirm all property taxes are paid current or identify any delinquencies. Taxes are paid in arrears; understand the timing and installment schedules. Look for any open tax liens or pending tax sales.

d. Tax Liens and Sales, understand the process for tax lien sales, including annual tax sales and scavenger sales. Review redemption periods and procedures if taxes are delinquent. Identify any forfeiture bills or special district tax bills that could affect title.

Abstract Authority’s Tax Examination Service

Effective due diligence requires thorough examination of both the chain of title and property taxes to ensure clear, marketable title free of defects or senior liens. Abstract Authority provides a specialized, efficient service that consolidates these data points into detailed ownership reports, enabling informed investment and legal decisions.