What is a Chain of Title?

Chain of Title refers to a document or a record which proves legal ownership of an asset or a property. These papers are mandatory for the establishment of ownership of a title, an asset, or a property; thus, they tend to be well preserved and maintained in centralized systems and registries. The term chain of title is derived from the use of the papers; a document which traces back to historical data of transfer from the initial owner to the current possessor. Thus, the term chain is used to denote the numerous connections from the first possessor to the current owner.

How Does a Chain of Title Work?

Chain of title is absolutely useful and indispensable in the real estate sector. When transactions want to take place in this sector, the buyer is provided with every information about the chain of title by his or her title company. This is done to prevent cases of fraud and scams related to property transfers. The title company in this case compiles all transfers that have taken place on the asset into a title report. They also bear any financial losses resulting from errors in the report if the buyer is covered by a title insurance. The Torrens title system is one of the numerous registration systems which have been created to track title records and reports of the possession of different segments of real estate properties. Some title companies have private records of property transfers alongside the federal report, while in other cases, the chain of title is included in an abstract of title which is usually signed by an attorney, although not in all cases. Insurance firms in the U.S. are required to issue title insurance on the chain of title when the ownership of an asset is being transferred. The Mortgage Electronic Registration System (MERS) which was mostly used 1995 was one of the reasons why there was absence of transparency in chain of title in that period. Lenders and creditors relied on this firm to hold their titles to avoid the fees and hassles that came with property transfer at the local government level. This is because, the firm allows the exchange of mortgage liabilities without requiring the exchangers to file a property transfer report. This action has raised objections in different regions in the United States and they has even be some legal actions against this practice.

How Chain of Title Works in Other Sectors

Chain of title is most commonly used in the real estate sector, although, they have been some deviations in recent years. In the technology sector, chain of title has been used in protecting or showing transfers of intellectual property of movies and movies, and also visible properties like patent rights and farming estates. For example, chain of title refers to the documentation that creates the intellectual property rights of a movie in the motion image sector. In other sectors like the research sectors, chain of title is used to depict the right and creative contribution of different people in a project. This allows them to now authorship rights and prevent plagiarism. Movie producers and distributors are some of the people who take chain of title very seriously apart from those in the real estate industry. This is because they need to obtain legal right to intellectual property in order to feature a movie or even promote and distribute it.

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