IndyStar: Salin Bank Suing Former Owner Of Davis Homes
Actual Knowledge Defeats Indiana’s Bona Fide Purchaser Defense Too

What Does “Chain Of Title” Mean?

The Indiana Court of Appeals in Weathersby v. JPMorgan Chase, 2009 Ind. App. LEXIS 836 (Ind. Ct. App. 2009) (.pdf), which I’ll discuss in more detail next week, explains the idea of “chain of title” and what it means in Indiana.  To brush up on your real estate vocabulary, keep reading.

Chain of title.  Weathersby explains what “chain of title” to a tract of land is.  Here are the Court’s words:   

 In a title search, the prospective purchaser or his abstractor assesses the marketability of title to a tract of land by determining the “chain of title.”  Beginning with the person who received the grant of land from the United States, the purchaser or abstractor traces the name of the grantor until the conveyance of the tract in question.  The particular grantor’s name is not searched thereafter.  As the process is repeated, the links in the chain of title are forged.

My trusty Black’s Law Dictionary defines “chain of title” as:

 Successive conveyances, or other forms of alienation, affecting a particular parcel of land, arranged consecutively, from the government or original source of title down to the present holder.

Indiana’s system.  Indiana counties are required to maintain a name index system for recording deeds and mortgages.  See, Ind. Code § 36-2-11-12.  These indices are organized alphabetically by grantor and by grantee, or mortgagor and mortgagee, with cross-references.  Furthermore, the indices describe the tract and show the date of the recording.  As noted in Weathersby, purchasers of real estate are presumed to have examined these county records and are legally charged with notice of the facts in them.  This rule applies to both purchasers and mortgagees.  A record outside the chain of title does not provide constructive notice to bona fide purchasers for value, however. 

Following a chain of title is sort of like connecting the dots of ownership.  As I’ll illustrate in next week’s post, there are times when parties, outside the chain of title, claim an interest in, or ownership to, real estate.  Weathersby addresses what can happen in such a scenario.