What is an 'affidavit of title'?

An affidavit of title is a legal document wherein a property owner affirms that they hold clear title to their property and that there are no undisclosed encumbrances or liens affecting the property. This sworn statement serves to assure potential buyers or lenders that the title is free from claims or issues that have not been disclosed. It provides a level of protection and reassurance in real estate transactions, confirming that the seller has the legal right to transfer ownership.

The concept is fundamental in real estate because it helps to facilitate a smoother transaction process, ensuring all parties are aware of the property’s status and potential encumbrances. This helps prevent future disputes over ownership or title issues, giving buyers peace of mind.

The other options do not accurately describe an affidavit of title. A type of mortgage agreement refers to financing methods, a rental agreement is specific to leasing properties, and a legal document regarding future property taxes does not pertain to ownership or encumbrances directly. Thus, the correct choice is indeed the one that identifies the affidavit of title's role in confirming ownership and the absence of undisclosed encumbrances.