Certificate Of Title

A certificate of title is a state or municipal-issued document that identifies the owner or owners of personal or real property. A certificate of title provides documentary evidence of the right of ownership. When issued for real property (such as land or a house) by a title insurance company, the certificate of title is a statement of opinion on the status of the title, based on a thorough examination of specified public records.

In the world of real estate, title is the right or evidence of the right of ownership of real property. In order that all involved parties have an accurate assessment of ownership, public record-keeping is a necessity as it provides legal and public notice regarding any entity’s interest in a specific piece of property. This public paper trail allows for parties to protect their interests against any third-party claims.

During the sale of property, the owner must guarantee to the buyer that the title being conveyed is free and clear of anyone else’s claims. A part of that process is demonstrating proof of ownership through means of a certificate of title. The certificate of title is a statement of opinion that a title company or attorney believes that the property is owned free and clear based on researching available public records. Public records should list any encumbrances on the property, such as liens or easements.  

However, a certificate of title is not a guarantee of a free and clear title. There could be unrecorded encumbrances and liens, incorrect recorded information, or fraudulent activity that are simply unknown. For such reasons, title insurance would be purchased to protect the seller from any claims arising from prior or unknown unrecorded or fraudulent activity.  Title companies provide certificates of title to lenders that require these documents prior to approving mortgage loans.

Certificates of title are also issued for vehicles, including automobiles, buses, motorcycles, motor homes, trailers and trucks, aircraft and watercraft. These are issued by a designated state agency to identify the owner of the vehicle, aircraft or water vessel. Any liens or outstanding loans will be identified on the certificate of title. Often, a lender (such as for an automobile loan) will hold the title until the obligation has been satisfied, at which point the lien is released and the certificate of title will be sent to the owner.