What is an Abstract of Title in Canada?

Here we breakdown the key components of an abstract of title and explain its importance in real estate transactions.

An abstract of title in Canada is a comprehensive historical record of all transactions and legal documentation related to a specific property or piece of land. It provides a detailed account of the property’s title history, including transfers, liens, and legal actions associated with the property. The abstract of title is important for both buyers and sellers to ensure the title is clear and to validate the property’s origin.

Key Components of an Abstract of Title

Chronological Overview
The abstract of title presents a chronological overview of all historical legal documentation linked to a property.

This includes:

• • Titles
  • Transfers
  • Claims
  • Easements
  • Encroachments
  • Encumbrances
  • Liens
  • Litigations
  • Restrictions
  • Tax Sales

Initial Grant Deed
Typically, an abstract of title starts with the initial grant deed and encompasses all subsequent changes in ownership. This allows clear tracking from the original owner to the current owner.

Outstanding Liens and Encumbrances
The document records any outstanding liens against the property. This includes back taxes owed and unresolved building code violations. It is essential to reveal any financial or legal burdens on the property that need resolution prior to a sale.

Legal Actions
The abstract includes any legal actions connected to the property. This ensures potential buyers are aware of any ongoing legal disputes or claims related to the property, which may affect ownership.

Title Insurance
In cases where the abstract of title is not available, an owner’s policy of title insurance may be used to perform the same function. This insurance covers title defects and ownership challenges for the property owner.

Importance in Real Estate Transactions

Verification of Clear Title
Purchasers or investors use the abstract of title to confirm that the title is clear and free of any disputes or claims. This document helps to ensure the buyer acquires a legitimate and undisputed title to the property.

Title Binder Production
Title companies use the abstract of title to produce a title binder. The title binder is a preliminary report that outlines the condition of the title and any issues needing resolution before the final transfer of ownership.

Related Terms

Chain of Title
The chain of title refers to legal records that trace the ownership of a property from the most recent owner to the original owner. This provides a clear ownership history.

Conveyance
Conveyance is a document that transfers a property title from one party to another. It officially changes the property ownership.

Examination of Title
This involves reviewing public records and title abstracts to determine the chain of ownership of a property. It is an important step in the due diligence process.

Title Insurance
Title insurance covers title defects and ownership challenges on a property. It is a protective measure for both buyers and lenders against possible legal challenges.

Title Search
A title search checks public records to ensure that the owner of real property has the right to transfer ownership. It aims to identify gaps in the chain of title, liens, and other issues that might affect the transfer of ownership.

Ontario Land Title System

Governance
In Ontario, the land title system is governed by the Land Titles Act. This act guarantees the title, including ownership and encumbrances, to each parcel of real property registered within the system. This governance simplifies title searches and helps provide a clear understanding of the conditions impacting a property’s title.

Land Titles Absolute
A designation of Land Titles Absolute indicates that the property is free of any encumbrances or deficiencies, offering an unequivocal right of ownership to the owner.

Land Titles Conversion Qualified (LTCQ)
Properties initially registered under the Registry Act and then converted to the Land Titles System are classified as Land Titles Conversion Qualified (LTCQ). These properties may have supplemental qualifications noted on the parcel register.

Accessing Title Records
In Ontario, Teranet provides online solutions for accessing official land and property ownership records. The OnLand platform allows users to search for various types of property information, including titles, deeds, and mortgages.

It also offers access to historical records, such as abstracts and parcel registers. This platform is invaluable for obtaining necessary property documentation.

Role of Real Estate Professionals
Real estate lawyers or notaries usually complete the abstract of title. They provide a comprehensive snapshot of all mortgages, liens, litigations, and easements associated with property. This ensures all parties involved in a real estate transaction understand the property’s legal standing, mitigating the risks for buyers, sellers, and lenders.