What does breaking the chain of title mean in foreclosure?

The chain of title in real estate terms involves the history of ownership on a home.  Since home sales have become a matter of public record, the history of ownership, or the “chain of title” has been something that is recorded and tracked. There is a system, called the Mortgage Electronic registration system (MERS). MERS and chain of title are related as this system is designed to help keep track of who has mortgage rights to a home.

Consider these factors when it comes to a chain of title or breaking a chain of title in foreclosure cases: 

• Essentially the chain of title indicates that on such and such a date, the title on a property transferred hands from one person to another, with this or that banking institution holding the mortgage loan against that property.

• A break in the chain of title means that there is a lack of ownership records in a particular instance.  Either that the ownership has come to be un-recorded, or has somehow been lost in various property transfers.

• For example, in the case of a divorce, the title of a property may go from joint owners to one owner.  A lawyer must make sure that the title change is recorded, or when the owner goes to sell, or has the home foreclosed on for any reason, there will be a “clouded” title, which may make it difficult for others to purchase or for a bank to clear a foreclosed home.

If there are questions as to whether the chain of title is clear in your case, you should consider speaking with a lawyer. Your attorney can help you to understand how the chain of title can affect you and how it may help you to prevent foreclosure.