YOUR ABSTRACT – WHAT IS IT & HOW IMPORTANT IS IT
When buying or selling a home in the state of Iowa, there is a lot of paperwork involved for both the seller and the buyer. It might be confusing when you hear all that needs to be done and what paperwork you’ll need, particularly if you’re a seller.
Among the words you’ll hear is abstract. It’s not something you might be familiar with, but you should. Especially if you’re the seller.
So what is an abstract anyway!! An abstract is a history of the title of a property. In essence every property (in the state of Iowa) should have an abstract. All things of a legal nature that affect a particular property will be documented in the abstract – not at the time the event occurs but before a property is resold.
Abstracts are typically identified by a properties legal description. If a properties legal description is
“Lot 1, of Lot 2, of Nottingham Estates” you should see that written on the front of the abstract jacket.
Abstracts are written on legal size paper and are usually rolled up and rubber banded together. They can sometimes consist of over 100 pages. The first entry in an abstract is usually a description of the property and the second entry is usually (but not always) the transfer of the property from the United States to an individual. Most of these entries were made in the mid 1800’s
So what kinds of entries would you expect to find in an abstract? As we said above, anything of a legal nature that affects a property. An example would be when one person transfers (usually by sale but not always) their interest in a property to another. So when one person sells a property to another an entry will be recorded in the abstract for that property identifying that transaction. Or maybe when one person dies and their interest in their property is transferred (inherited) by another an entry will be noted in the abstract.
Other entries you may see in an abstract might be when a property owner borrows money on their property and gives their bank a mortgage, or when someone files a lien against the property for some reason.
So here is how it works. You bought a property 10 years ago. You plan to sell and move up. Before you close the sale of your existing property you will need to have the abstract “updated” to show all of those “legal” things that might have happened over the last 10 years you owned the property. For instance maybe you mortgaged your property a couple times or maybe there were some liens filed against your property you were unaware of.
So the abstractor updates the abstract and delivers it to the buyers attorney so he/she and :”read” the abstract and render an opinion as to the quality of the title. The examining attorney will point out defects to the title – unpaid taxes, liens, mortgages, etc.
In many cases when an abstract is updated the seller (owner) is very surprised to find out that there are defects to the property title that they were not aware of. Regardless, the defects pointed out in the attorney’s opinion will need to be dealt with. This can be a confusing and frustrating process – and sometimes expensive. Buyers can but rarely do accept title defects.
- If’ you’re thinking of selling your home, make an effort now to locate your abstract. If you have to have a new abstract made it will on average cost, you between $400.00 to $600.00. Where might you find it? Try you lock box if you have one or call your lender & or the attorney who read your abstract when you purchased your home. If that does not work for you ask your Realtor to check – there are some abstract holding companies who might just have yours.
- When you get the buyers attorneys opinion, if there are defects that need to be cleared up, ask your Realtor to look the opinion over to see if there is anything they can do to help clear them up. No need to pay your attorney to do that if your Broker can.
- Do not be alarmed by defects that show up on the opinion. In me 48 years in business I have never seen a transaction that could not close due to title defects.
- Since Iowa is the only abstract state left in the country, and the person buying your house is using an out of state lender, don’t be surprised when that lender requires title insurance and appears to be somewhat confused when you start talking abstract to them.
- If need be rely on your attorneys advice in the event you have to ask them for assistance.
You won’t be able to transfer title to your property to the buyer until all title defects have been cleared up. This is a task that 99.9% of sellers will be unable to accomplish themselves. Rely on the people you hire to represent you in your real estate transaction.
If you’re thinking of selling your home, an abstract is one of many things a Realtor can help you with. They can suggest who to contact if you can’t find your abstract or who to get in touch to get it updated.
At American Realty our Realtors are very familiar with abstracts and how to ensure your information is correct. We work with home sellers in Dubuque, Cascade, Dyersville, Peosta, Asbury and other communities in the surrounding area. Call us today to begin the home selling process.