What does "chain of title" refer to?

"Chain of title" refers to the history of ownership affecting the title to a parcel of land. This concept is crucial in real estate because it establishes the sequence of historical transfers of ownership, documenting who owned the property at various points in time. This history helps identify any potential issues with the title, such as undisclosed heirs or claims on the property, which could impact the current owner's rights. When purchasing property, a clear chain of title is essential to ensure that the buyer receives good title and does not face legal disputes over ownership in the future.

The other choices do not accurately represent what "chain of title" entails. For instance, a summary of land improvement projects pertains to development and has nothing to do with ownership history. A record of property taxes paid is related to the financial obligations associated with the property rather than its ownership. Lastly, a list of all encumbrances on the property focuses on claims or liabilities against the property rather than the ownership history itself.