PSI New Jersey Real Estate State Practice Exam

What is a complete historical summary of all recorded documents affecting the title of a property called?

1. Abstract of title

2. Title insurance

3. Certificate of title

4. Property deed

The correct answer is: Abstract of title

A complete historical summary of all recorded documents affecting the title of a property is referred to as an abstract of title. This document provides a chronological account of all the legal events and documents that pertain to a particular property, including deeds, mortgages, liens, and any other encumbrances. The abstract of title is essential for establishing the chain of ownership and ensuring that a potential buyer is fully aware of any claims or issues that might affect their interest in the property. In contrast, title insurance provides financial protection against losses from defects in the title that were not found in the public records at the time the insurance was issued, but it does not summarize title history. A certificate of title serves as proof of ownership but is not a thorough historical account. Similarly, a property deed is a legal document that conveys ownership of real estate but does not summarize all the transactions affecting the title. Hence, understanding that the abstract of title compiles historical data and conveys critical information regarding the property's title history is key to grasping its importance in real estate transactions.