Evidence of title: Overview, definition, and example
What is evidence of title?
Evidence of title refers to the legal documentation or records that prove ownership of a property, asset, or financial instrument. This evidence confirms that the owner has the right to use, sell, lease, or transfer the property without disputes or claims from third parties.
For example, in real estate transactions, a deed or title certificate serves as evidence of title, proving that the seller legally owns the property and has the right to transfer it to a buyer.
Why is evidence of title important?
Evidence of title is important because it ensures that ownership claims are valid, clear, and legally recognized. It protects buyers, lenders, and investors from fraud, ownership disputes, and defective transfers by verifying that the seller or transferor has the legal authority to sell or transfer the asset.
For businesses, requiring evidence of title in agreements prevents issues such as fraudulent sales, undisclosed liens, or competing ownership claims, especially in real estate, intellectual property, and financial transactions.
Understanding evidence of title through an example
Imagine a commercial real estate purchase where a company buys an office building. Before finalizing the deal, the buyer requests evidence of title in the form of a title deed and a title search report. This ensures that the seller legally owns the property and that there are no liens or legal disputes that could affect the transaction.
In another case, an artist sells a copyrighted illustration to a publishing company. The publisher requires the artist to provide evidence of title confirming they hold full rights to the artwork and that no third party has ownership or claims over it. This prevents future copyright disputes.
An example of an evidence of title clause
Here’s how an evidence of title clause might appear in a contract:
“Seller represents and warrants that it holds clear and marketable title to the property and agrees to provide Buyer with sufficient evidence of title, including but not limited to deeds, title certificates, and lien searches, prior to the completion of the transaction.”
Conclusion
Evidence of title is essential in real estate, business transactions, and intellectual property transfers, ensuring that ownership rights are valid, undisputed, and legally recognized. It protects buyers and businesses from fraud, encumbrances, and ownership disputes.
By including an evidence of title clause in agreements, businesses can reduce legal risks, ensure clear ownership transfers, and protect financial investments.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.