What is a Certificate of Title?

Published by Thomas Herold in Laws & Regulations, Real Estate

'Certificate of Title' is explained in detail and with examples in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

A certificate of title represents a document which states who the owners or owner of real estate or personal property actually are. It is issued by a municipal or state government. This certificate gives evidence of any ownership rights.

In general a title insurance company will issue a certificate of title opinion on a house or piece of property. This is their statement of opinion regarding the status of a title. They draft this opinion after carefully looking through public records pertaining to the property.

Such a certificate of title opinion will not necessarily assure the buyer of a clean title. It will list out any encumbrance on the property. Encumbrances are often items that keep the property from being freely sold. These could include easements or liens. The title companies will issue such certificates to financial institutions which are making the loan. Many of these lenders must have such documents in hand before they will approve a mortgage loan for a house or piece of property.

Certificates of title are extremely important with real estate. This is why a title company will issue their opinion that the person selling the property actually owns it. Personal property is easier to give to another person than is land. Where land is concerned, a person might be living on a given property and yet not own it. This makes the certificate opinion from the title company critical. It promises that the company has performed the complete background check regarding who owns the land and so has the right to sell it.

This certificate of title is a statement of fact when a state or municipal government actually issues it. These documents contain a good deal of useful information on them. All of them will have the name and address of the owner of the property. They also have information that identifies the property itself in some specific way.

If the certificate pertains to a real estate property, then it will have the location of or address for the land in question. If it is instead for a car or other vehicle, it will have the license plate number and possibly the vehicle identification number. These certificates will also state what the encumbrance is on the property if there is any. If there is a lien on a vehicle or mortgage on the house or land, this will be noted.

State agencies will also issue certificates of title on a variety of vehicles. This covers such things as buses, trucks, motorcycles, trailers, motor homes, boats and watercraft, and airplanes. When a lender makes a loan on such a vehicle, it is able to keep the title in its possession until the debt has been paid in full. They then release the lien at this point and send back the title certificate to the actual owner.

Certificates of title should not be confused with deeds though they share certain common characteristics. Each of these two documents offers a proof of ownership for the property in question. The certificate of title has sufficient information to specifically identify the property itself and any relevant encumbrances. Deeds have additional information on the real property. This includes any conditions for the ownership as well as more detailed information on and about the property. Deeds are critical elements in any transfer of real estate.

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The term 'Certificate of Title' is included in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.