Certificate of Title – Definition

Cite this article as:"Certificate of Title – Definition," in The Business Professor, updated August 1, 2019, last accessed October 26, 2020, https://thebusinessprofessor.com/lesson/certificate-of-title-definition/.

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Certificate Of Title Definition

In the real estate industry, a certificate of title is a document that shows the rightful or legal owner of a property. Before any individual can claim ownership to a property, whether it is a personal or commercial property, a certificate of title must be presented. A certificate of title is issued to an individual showing his as the rightful owner of a property after thorough examinations might have been conducted by a title insurance company.  The certificate can be issued for a land or a house.

A Little More on What is a Certificate Of Title

A legal document showing the legal ownership of a land or property in the real estate is a certificate of title. This is a proof or evidence that an individual owns a land or a house. In order to avoid conflicts over a property in the real estate, a title insurance company carries out an assessment to detect who the real owner of a property is before a certificate of title is issued.

When a property is to be sold, the seller must present the certificate of title as a proof that the property belongs to him. This certificate would clear all doubts as to who the real owner is. Liens, easements and other encumbrances on the property must also be listed in public records.

A Certificate of Title is not a full Guarantee of Ownership

It is important to note that a certificate of title does not stipulate that there is no encumbrance, lien or easement on the property owned by an individual. Although, in most cases, such encumbrances are put in public records but there are instances of liens and encumbrances that are not recorded.  Also, some real estate owners supply inadequate information as regards encumbrances on the property. This is why it is of utmost important to title insurance companies that a certificate of title is issued to the real owner of property before such a person takes loans using the property as collateral.

Non-Real Estate Certificates of Title

Certificates of titles are not only used in the real estate industry. Aside from lands and houses, this certificate can be issued for motorcycles, trucks, vehicles, aircraft and other automobiles. Certificates of tiles on vehicles, trucks, trailers and automobiles show who the real owners of the items are. There is often a municipal or state agency saddled with the responsibility of issuing certificate of titles for owners of these items.  Before an individual can take a loan using a vehicle, truck, aircraft or other automobiles as collateral, the lender often as for the certificate of title issued on such properties.

Reference for “Certificate Of Title”






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