What is the purpose of a chain of title?

On Behalf of | Jan 19, 2022 | Real Estate Transactions

In Delaware and around the country, the most important part of the purchase and sale of real property is the transfer of title from one owner to another. Where the title is the legal basis for ownership of property, its documentation and proper recording by each owner provide the basis for its legitimacy.

As property passes from one owner to another, it leaves a trail that becomes its history. The details contained within the recorded documents will tell the tale of its owners, how they financed its purchase, liens placed to satisfy debt from creditors, contractors, or the IRS, as well as usage rights or restrictions on sale, usage, or improvements to the property.

What documents are part of the chain of title?

The most common documents that maintain the chain of title are:

  • Transfer documents
  • Financial documents, including involuntary liens
  • Covenants and restrictions
  • Easements

It is the deed that both conveys the property from grantor to grantee and contains the description of the property. Financial documents such as mortgages and deeds of trust are arrangements in which the lender has title to the property while the mortgagee or beneficiary pays the mortgage or loan off.

Involuntary liens, on the other hand, will record property tax, creditor judgement, or mechanic’s liens that cloud title and require repayment before the owner can sell the property.

Other documents in the chain of title may include covenants and restrictions, which give important information about usage or development restrictions on the property. Easements also act on usage rights to the property, and are in place due to agreements of prior owners to another’s access or use of a part of the property.

What specific information is in the chain of title documents?

In Sussex County, chain of title documents are held at the Office of the Recorder of Deeds, where individuals can find important information on real property, such as:

  • Names of grantor and grantee.
  • Description of parties as well as relationship status and mailing address.
  • County and state where the property is located.
  • Full legal description, address and parcel number.
  • Document, book and page number, and reference to records of prior instruments

When there are title defects or breaks in the chain of title, this can cloud the title and make it extremely difficult to sell the property. The process of defending the title or correcting defects in Delaware is usually taken care of by title insurance coverage as part of a mortgage. But if the owner purchased it without a loan or inherited it, it is important to do the research to make sure the title is clear.

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