What Does Title Mean?
When lawyers and other real estate professionals talk about "title," they are referring to who has legal ownership and the legal right to possess a piece of property.
Although the idea of legal title can be applied to anything, people most often use the term to refer to the document that signifies ownership of real estate (land, buildings, and manufactured homes) and vehicles (cars, boats, and aircraft). These are all substantial purchases that can have complicated ownership arrangements.
A defective title can result in problems establishing ownership, which can complicate resale and impact your rights to use your property.
Problems With Title in Real Estate
It is possible to make mortgage payments on the property for years and yet not have a clear title to the property because the deed had a defect or was not properly recorded. The "cloud" or "encumbrance" on your title could come from several sources.
Past Ownership Claims
How the home or land changed hands in its early years may have been lax. The original owner may have failed to formally grant the deed of the land to their child, or family members may have assumed the land was inherited and failed to transfer title to the land during the probate process. If no one complained, this error could have gone unnoticed for years.
Or perhaps someone took the land through adverse possession — a neighbor maintained a strip of land and continued to use it until it became theirs. There may never have been a clear transfer of ownership rights.
In these instances, someone from the past could come back to take title to the property.
Liens are like mini-mortgages placed on a property to force the property owner to pay a debt. One of the most common liens against a property is a mechanic's lien, which ensures that a contractor who worked on the property gets paid. But other types of creditors can also "attach" a lien to a property. The lien could be for unpaid taxes, for unpaid child support, or as surety on a loan.
The lien must be paid before the property can be sold to a new owner.
An easement is a right-of-way promise that the original landowner made with someone else. For example, the owner may have promised the neighbor that the neighbor would always be able to drive across a particular part of the property in order to reach the garage located on the neighbor's property.
Ideally, this promise was written into the deed and continued to be included every time the house was sold. But it's also possible that it was never written into the deed but was established by continuous conduct (this is called easement by prescription). If that is the case, not all jurisdictions would require that it be written into the deed. You should talk with a real estate attorney in your community to understand how this is handled under local law.
Buyer's Protections Against Title Defects
Fortunately, there are several things you can do when buying a new home to minimize any problems that could arise from a defective title.
Your first action should be to hire someone to perform a title search. This is typically done by your title insurance company during the home-buying process. The title company completes a "chain of title" search at the local county recorder's office where the property is located. By going through the title index, the title company reduces the possibility that a claim will arise later.
Most real estate attorneys are happy to do this for you as well, should a question arise about a title, easement, or lien at a later time.
Sometimes a title problem is not discovered during that initial title search. You can protect yourself from the financial problems that could result from a later discovery by buying title insurance. Title insurance covers you in case someone who thinks they have a claim to your property sues you in what is called a "quiet title" action.
Buyers typically purchase title insurance as part of their home purchase.
A third way to protect yourself from a title defect is to ask the seller for a general warranty deed. You can also write a contingency into your home purchase agreement that states that if the current owner cannot prove that they have a clear title, then you can back out of the agreement at no additional cost.
Have Legal Questions About Home Titles? A Local Real Estate Attorney Can Help
Title issues can have a huge impact on the rights to real property and a person's ability to sell it. Problems with unclear title can result in huge financial losses, unnecessary lawsuits, and uncertainty about your rights. A local attorney real estate attorney will be able to cut through the legalese and give you the right advice.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.