What is a Defective Title?
The phrase to have “valid title” to property means that a person has the exclusive legal right to own and use a piece of property. For a title to be valid, that title must be free of defects. If a title is defective, a seller of the property may be required to “clear title” or remedy title defects before the seller completes the sale of their property to a buyer.
What Kinds of Title Defects Exist?
The following types of title defects exist:
A superior claim to ownership by another person or entity: A creditor, which is someone to whom an owner owes a money judgment, may have a superior claim to someone seeking to purchase a piece of property. A creditor protects their interest in the property by filing what is known as a lien in the county land recording office. A would-be seller of the property must pay off or satisfy this lien before the buyer can purchase the property.
A mistake in the description of the property in the deed: A deed must accurately describe the property’s boundaries. If the deed does not sufficiently identify a piece of property or inaccurately describes a piece of property, there is a defect in the title.
Another mistake in the deed: An example of another error or defect in the deed occurs when either the person who granted the property to the current owner, or the current owner himself, failed to sign the deed or failed to date the deed.
Failure to record a deed: When someone files a copy of a deed to their property with the county land recording office, the law regards this filing as having given notice to the entire world of the fact of the ownership interest. Such notice is called “constructive notice,” meaning even though the filing does not provide actual notice to a specific person, the law deems or construes that notice to be actual.
The property is subject to a mortgage: If the landowner picked out a second mortgage on the property and declined to record that mortgage, then the title is defective. While a consumer can assume a mortgage, which means acquiring the property while agreeing to serve that mortgage, the buyer is not required to do this.
Can Title Defects be remedied?
Individuals seeking to sell real property to others should handle what is called a title search before seeking to handle the property. A title search is generally managed by a company known as a title company. When the member of the title company operates the search, that individual will go to the county real estate recording office to examine deeds associated with the land. The individual will also search what is called the grantor-grantee index. This index consists of two lists of land transfers.
One list is an index of donors. The list is managed alphabetically, generally by the last name, of unions who have handled the land. The other list is an index of buyers. This list is an alphabetical list of parties who have earned the property. The title company will also conduct a search of court documents to see if there are any liens or assessments against the property.
Once an owner is aware of title defects, the owner can attempt to remedy the defects. Liens are remedies by paying off the debt held by the lienholder. Improper descriptions of the property in the deed can be fixed by asking a court to reform or modify the terms of the deed. Mortgages can be “cleared” by the owner obtaining a document known as a “release of mortgage” and then recording that document with the land records office.
Not all title defects can be easily cured or remedied. When ownership of property is disputed, the person claiming ownership may have to file a lawsuit in court. This lawsuit is known as a “quiet title” lawsuit.
In the lawsuit, the owner will present evidence that their claim to the property is superior to that of a lienholder or holder or a mortgage or whomever else is claiming an interest. The judge will review the evidence and make a decision. If the owner is successful, the owner will receive an order, called a declaration, from the judge. The order will state that the owner is the lawful owner of the property. The owner should make sure this order is recorded so others are put on notice of their ownership.
Do I Need the Help of a Lawyer for Defective Title Issues?
If you believe there is an issue with valid title to the property, you should contact a real estate attorney. An experienced real estate attorney near you can advise you on how to proceed to remedy any title issues. This attorney can also represent you at hearings and in court.