Certificate
of title - A document provided by a qualified source (such as a
title company) that shows the property legally belongs to the current
owner; before the title is transferred at closing, it should be
clear and free of all liens or other claims.
The procedure used in tracing a chain of title is slightly different
in some Eastern states, where an attorney rather than a title
company is hired to examine all the recorded documents related
to title. The attorney makes a report of his findings in what
is called an abstract or certificate of title. This report details
both what records were examined and what encumbrances currently
exist against the title, and it is essentially the same against
undisclosed defects, such as forgery, clerical errrors, undisclosed
heirs, improper interpretation of wills, and so on. If an attorney
makes a negligent mistake in his title search, naturally you may
sue him for any losses you suffer due to his negligence just as
you may sue a title company under the same cirumstances.
A certificate of title does not offer protection against hidden
defects in the title that an examination of the records could
not reveal. The issuer of a certificate of title is liable only
for damages due to negligence.
