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 errors, 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 circumstances.

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.

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