Absolute Title: What it is, How it Works, FAQs

What Is an Absolute Title?

An absolute title to a property (also known as a perfect title) is free of any encumbrances or deficiencies. An absolute title gives an unequivocal right of ownership to the owner and cannot be disputed or challenged by anyone else. This is opposed to titles with liens, attachments, or judgments against them. Holders of absolute titles are the full owners of the property.

How Absolute Titles Work

A title search will usually unearth any problems with regard to the title of a property. The search is well worth the cost when someone is considering buying real estate. A title search is usually conducted at the local registry office.

Title search agencies specialize in researching properties to ensure that the seller has at least a “salable” interest in the property they put on the market. Moreover, the title search will also reveal if there are any remaining obligations associated with the property because they remain connected to the property and not the owner.

For instance, if outstanding taxes remain uncollected on a property, it could impair the sale to a new owner until the matter is resolved. Furthermore, if a spouse holds some claim to a property—for example, during divorce proceedings—the seller does not hold the absolute title over the property. In contrast, if the property owner has an absolute title, it would make the transaction unhindered on the seller’s behalf.

The Rights an Absolute Title Provides

An absolute title has no outstanding contestations that might otherwise hinder the owner’s ability to use or dispose of the property as they see fit. The holder of the absolute title is free to sell the property at their own discretion, which could give the buyer the absolute title upon completion of the transaction, depending on how the purchase was structured. The seller of a property can only transfer the portion of an absolute title in which they are vested. In other words, a buyer cannot obtain an absolute title through a seller who does not possess it.

The holder of an absolute title can also choose to lease or rent a property rather than to sell it outright. A financial institution might hold the absolute title for a property it has mortgaged. Through the absolute title, the property owner, gains the right of ownership of a mortgage deed. That, in turn, would give the owner the right to call for full repayment of the outstanding mortgage debt, in certain circumstances, before the previously determined due date. With the absolute title, there might also be a clause that the owner establishes in the deed that allows for early termination of an existing interest in the property.