Hello, my name is Alex Hunter. I abstract for State Street Title Agency, LLC. In this post I will outline the abstraction process.
My job as an abstractor is to dig through the public records, and pull relevant documents for the parcel of land that we are insuring. This collection of documents is known as the abstract. These documents can include deeds, mortgages, liens, easements and bankruptcies, as well as many other additional documents.
The first thing I do is hunt down the last deed of record. This shows me who currently owns the property. It is important that the owner listed on the deed matches our seller listed on the purchase agreement. I also perform a name search for relevant parties. I do this using a program called DataTrace, which is essentially a database of the public records, specifically designed for title use.
Next, I find the point of good title (POGT). This is the point at which we can consider our title marketable. Marketable title is simply title that is free from defect to the point that educated buyers would be inclined to purchase the parcel in question (for title-related reasons). In some cases, the last deed of record is the POGT.
The main indicator I look for when searching for a POGT is a purchase money mortgage (PMM), with an accompanying warranty deed. A PMM is simply a mortgage granted* by a purchaser to a lender, corresponding with a loan to finance the transaction. The PMM, in most states, including Michigan, will take first lien position over other existing liens against the mortgagor**. The accompanying warranty deed adds extra protection, as a title company most likely insured both documents. I check the documents for signs that the transaction was insured by a title company as part of my search.
Once I find the POGT, I come forward through the chain of title, looking for any liens, open mortgages, or anything else of significance, while making sure our chain is unbroken. I cross-check the information from DataTrace with additional searches on the county database. Here, I search the property i.d., (also known as the parcel number or APN), the legal description of the property, and the relevant party names. If I find any additional information, I note it in my abstract.
My final abstracts are hand-written. I hand-write the chain of title from the point of good title forward, so we can see a brief chronological overview of the property history. I list open mortgages, liens, easements, and any extra pertinent information. I list the names I have searched, and list any additional liens that come up, if any, on those searches.
Once my abstract is complete, I hand it over to Dave Phillips, our title examiner, and he takes it from there.
*Note: mortgages are given to the lender by the borrower. The mortgage is the document given to the lender that creates a lien on the property. A mortgage is not actually a loan, but a document pledging real property in order to secure a loan.
**Note: a PMM will take priority over liens against the mortgagor, aka the buyer. A PMM will not take priority over liens against other parties, including the seller.
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