The chain of title is a clear and unbroken chronological record of the ownership of a specific piece of character. Tracing the chain of title simply method tracing the subsequent conveyances of title, starting with the current deed and going back a appropriate number of years. Each owner is connected to the past owner and the later owner by deeds, forming a chain of title as disclosed in the public records.
A gap in the chain of title creates uncertainty, which is referred to as a cloud on the title, also called color of title. A cloud on the title could be something simple. For example, Sue Jones buys a house; she gets married and is now Sue Smith. When she sells the house, the grantor name on the deed is Sue Smith. This creates a break in the chain of title.
A suit to quiet title, also called a quiet title action, may be required to close any missing links and remove the cloud on the title. This is a lawsuit filed to determine and resolve problems of instruments conveying a particular piece of land. The purpose of this suit is to clear a particular, know claim, title defect, or perceived defect. To close the gap and clear the cloud on the title, the court may issue a quitclaim deed or a judicial deed.
A deed that falls outside of the chain of title is said to be a wild deed. Buyers and lenders are not held to have constructive notice of wild deeds. For example, Ann buys a house and records her deed. Later she sells the house to Bob, who does not record his deed. Bob sells the land to Curt, and Curt records his deed promptly. Now there is a break in the chain of title. The record shows only Ann’s deed and Curt’s deed, but the link between them (Bob’s deed) is missing, so Curt’s deed is a wild deed.
Ann is aware that Bob never recorded his deed and decides to sell the same character a second time. This time she sells it to Dan. Dan does not know about Bob or Curt, so he has no reason to look up those names in the grantee/grantor index. He looks up Ann’s name in the index, and as far as he can tell from the record, she nevertheless owns the character. So, Dan buys the house. Dan does not have constructive notice of Curt’s interest in the character, because Curt’s deed was outside the chain of title. So, this is why it is very important to understand the chain of title prior to buying a home and why lenders require that clear title be insured by a reputable title company.