After searching high and low, you finally found a piece of property you like and that suits your needs. Once the due-diligence portion of the real estate transactions began, you did a title search to make sure that no one else had a legal right to the property, that there were no active liens on it, and that you will own the property free and clear.
You expected this process to be nothing more than a formality, but then you found out the title search revealed a potential problem. Does this mean you can’t complete the transaction? No, you may still be able to purchase the property, but that title issue needs addressing first.
What kinds of issues could come up?
First, let’s look at a few of the title issues that could prevent you from owning the property outright:
- An heir of a previous owner could claim a right to the property.
- The house has been vacant for some time, and there is a question regarding prior liens, heirs or lessees.
- A prior mortgage lien remains in the chain of title even though someone had supposedly paid it off at some point.
- Forgery or fraud of a prior deed could raise questions regarding ownership of the property.
- A boundary or survey dispute could arise because the legal description in the deed records does not match a survey.
- The legality of a quitclaim deed could arise.
- Errors in the recording process could occur that bring ownership, legal description and lien records into question.
Any of these issues could jeopardize your rights to the property. You may need to file a legal action in order to clear up these and other issues in order to ensure that you will own the property after closing, receive a title insurance policy and obtain financing, among other things.
A quiet title action could clear up title issues
Even though you may have included a contingency in your purchase contract, indicating that you could walk away if any title problems arose, you may still want the property. In that case, you could file a quiet title action, requesting that the court “quiet” the title, which means that you want the court to enter an order, clearing up the title problem so that you can enjoy all of the rights of property ownership. The process generally includes the following steps:
- File a quiet title action in the jurisdiction in which the property is located.
- Serve all of the relevant parties, which could include prior owners’ heirs, mortgage lenders and anyone else who may have a legal claim to the property.
- Address any valid claims by those who may actually have a legal claim to the property. You may need to negotiate payment of an unpaid lien or provide compensation to an heir with a legitimate claim to the property.
- Clear up any paperwork errors, such as a mortgage lien release that was simply not filed or typographical errors that changed the nature of the property.
- The court may enter an order, “quieting” any alleged claims to the property, which clears the title so you can own it properly.
- Record that judgment in the appropriate jurisdiction to make anyone reviewing the title records aware that the court has barred any future claims based on the title issue.
- Submit the judgment to the title company in order to obtain title insurance and proceed with the transaction.
The steps above may make this process seem simple, but it can become complex rather quickly, especially if someone asserts his or her rights to the property. For this and other reasons, you may not want to undertake this type of action alone. Working with an experienced real estate attorney could increase your chances of successfully gaining free and clear ownership of the property you want.