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Real Estate Basics: Abstract of Title

by | Nov 1, 2021 | Real Estate Law |

What are Abstracts of Title?

Most real estate owners in North Dakota either own or have heard of an abstract of title, commonly called an “abstract” for short.  For new landowners, the mystery behind this collection of documents is not always readily apparent. As the name implies, the “abstract” is a summary of all documents recorded against the property, whether they be deeds, mortgages, liens, satisfactions, easements, or contracts. These documents are recorded against each piece of land in the official records for the county in the County Recorder’s office.[1] Traditionally, each abstract will start with the patent, the official grant of the land from the United States of America to the original homesteader or landowner.  For some lands, the abstract will start with the grant from the United States of America to the state for school purposes or tribal land.  Not every state utilizes abstracts, but North Dakota and most of Minnesota use them for the majority of real estate transactions. Other states solely utilize title insurance. In North Dakota, title insurance also requires an abstract to be used.[2]

Who Creates the Abstract?

Abstracts are usually created by local businesses, with each county having its own abstract company.[3]  Some of the larger counties, such as Cass or Burleigh in North Dakota, have several companies that create abstracts. Generally speaking, these companies have long served their communities in creating abstracts of title, with many reaching back to the early 1900s.[4] Abstract companies research the land to make a shortened entry of each document recorded against the subject tract. In addition, abstract companies search for unsatisfied judgments, federal tax liens, state tax liens, and child support liens, as well as unpaid taxes. Every abstract company is required to be bonded and licensed to ensure they produce an accurate and complete abstract.[5]

When are Abstracts Updated or Created?

Whenever the title to the land is in question, whether it be before a purchase, mortgage, or other land transaction, the ownership of the land must be verified. In addition, it must be determined that there are no liens that have attached to the property, whether by a recorded document, such as a mortgage, or automatically by law, such as by a child support lien[6] or judgment.[7] Abstracts are delivered to the abstract company for updating, where the abstract company adds all documents and liens recorded or attached since the last update.  Each abstract company then certifies that the abstract contains all recorded documents and attached judgments and liens.

If there is no abstract for the property, a new abstract can be created. However, this is an extremely lengthy and costly process, as the entire chain of titles must be researched and created for the new abstract.  It is always best to store your abstract safely and make sure in any purchase agreement that you are provided with an abstract at or before closing.

Who Reviews Abstracts?

Through examination of an up-to-date abstract, attorneys can issue a legal title opinion or title insurance policy certifying to 1. the ownership of the property, 2.  any restrictions or easements of record, 3. any mortgages, judgments, or other liens affecting the title to the property, and 4. any other item of concern recorded against the property.  This careful examination and opinion are crucial to each land transaction: closing without a title opinion or title insurance policy can leave an unsuspecting buyer with a property subject to forced sale or foreclosure due to outstanding liens, judgments, or mortgages. At the worst, the buyer may have no ownership at all due to the seller’s fraud or an inadvertent mistake of ownership. Obtaining a clear title before closing is essential to a successful real estate transaction, as clearing a title after the fact can be timely, costly, and sometimes impossible.

Ohnstad Twichell has experienced real estate professionals who can assist you with your real estate needs.  As a company, we have examined countless abstracts and issued thousands of title opinions and title insurance policies.  You can rest assured that we will guarantee clear title to your real estate investments. Please do not hesitate to contact us if you have an abstract you need to be examined or other real estate work completed.

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*Disclaimer: This article’s content is for general information purposes only. Readers should not rely on this article as legal or tax advice. Laws, regulations, and information change frequently, and the article’s content may not be current. This law firm makes no warranties, guarantees, or representations about the content of his article. By using this website and reading this article, you understand that there is no attorney-client relationship between you and the author or Ohnstad Twichell, P.C.  Readers should consult with a licensed attorney in their state concerning their own situation with regard to the reader’s specific legal or tax questions.

[1] This position was formerly known as the Register of Deeds in North Dakota. See N.D. Cent. Code § 11-18-01.1 (2021) (“Whenever the term ‘register of deeds’ appears in the North Dakota Century Code, the term ‘recorder’ or ‘county recorder’, whichever is appropriate, must be substituted therefor. The recorder must be substituted for, take any actions previously taken by, and perform all duties previously performed by the register of deeds.”)

[2] N.D. Cent. Code § 26.1-20-05 (2021) (noting that an abstract of record title evidence must be used to issue title insurance documents)

[3] In some counties in Minnesota, abstracts are compiled by the County Recorder. Minn. Stat. § 386.37 (2021) (providing for abstract services by county recorders)

[4] See Red River Title Services dba Cass County Abstract Company, https://www.stewart.com/en/hybrid-sites/red-river-title.html (noting it has served the community over 100 years)

[5] N.D. Cent. Code Ch. 43-01 (2021) (providing abstract requirements, including certificate of authority, examination, and bond or liability policy); Minn. Stat. § 386.18 (2021) (allowing for authorization of abstractors and requiring execution of a bond to the state)

[6] N.D. Cent. Code § 35-34-02.1 (2021) (providing for child support liens attaching to real property); Minn. Stat. § 548.091 (2021) (stating that child support judgments attach to real property as liens)

[7] N.D. Cent. Code § 26.1-20-05 (2021) (noting that judgments are liens against all real property upon the docketing of the judgment in the county); Minn. Stat. § 548.09 (2021) (noting that after docketing, judgments are liens against all real property in the county).

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