If you are an owner of real property in MN, do you know what type of property it is? There are two types of real property that record ownership – Abstract and Torrens. Some properties might even be both! 

Let’s explore the two property types: Abstract Title and Torrens (Registered).

1. Certificate of Title (Torrens): In the Torrens system, the owner receives a Certificate of Title directly, bypassing the need for a chain of title. Each voluntary property transfer results in a new Certificate of Title.

2.  Abstract Title: Common in rural counties, it compiles all deeds, mortgages, and related documents affecting a specific piece of land. Abstract property can be converted (registered) to Torrens property.

Pros and Cons

Abstract Title

Pros:

1. Historical Context: Provides a comprehensive history of property ownership.
2. Effective and efficient: The recorder’s office records documents that can be searched electronically.

Cons:

1. Complex Title Search: Requires reviewing deeds and mortgages spanning 40 years.
2. Liens and Encumbrances: Potential claims may arise during title searches.
3. If the property is Torrens (or part Torrens), if an instrument (such as a deed, mortgage or mechanic lien) is filed in the recorder’s office as abstract then it will not be recorded in Torrens (thus not a properly recorded lien or deed!)

Torrens (Registered) Property

Pros:

1. Certainty: A Certificate of Title ensures clear ownership and disclosure of encumbrances on the property.
2. Efficiency: Simplified transfer process for buyers and lenders.
3. Not subject to adverse possession claims. It is registered property, therefore no right for a neighbor to claim a portion over the property line if in dispute!

Cons:

1. More common in urban areas.
2. Initial Setup: Converting to Torrens requires initial registration and court involvement.
3. For involuntary transfers (such as foreclosures or cancelation of a contract for deed), need a court to order that a new owner be listed on the Certificate of Title.

Conclusion

For Torrens property, it is easy to request a copy of your certificate of title at your county Registrar’s office. For abstract property, do you have your abstract? Owners don’t need to panic if they don’t have their abstract in hand. There are numerous instances where there is no physical abstract anymore. The actual abstract gets lost, destroyed, or when real estate transactions occurred, they were never given to the new owners. Abstract owners still own their property though, without having the abstract in their possession. The deed to your property is what shows ownership, even though you, the buyer, did not sign it. In today’s title and real estate world, when buying/selling a home, title and property searches are conducted mostly electronically at the Recorder’s Office to make sure there is clear title, so actual abstracts have become more of a souvenir, so to speak.

These are just a sample of the differences between Abstract and Torrens. Do you know what you have? Check your deed. Understanding the differences (or even knowing that there are difference types) helps property owners, buyers, and legal professionals better navigate the real estate landscape in Minnesota.