Real estate transactions are often complex. Even under the best circumstances, they can take a lot of time and attention to detail to ensure that property is being properly transferred from one party to another.
One aspect of the real estate transaction process that demands a lot of attention to detail is a property’s title. This is the document that provides information about the property and who rightfully owns it or can claim the property as their own. Property titles should also have a historical record of when the property was previously transferred and who was involved in those transactions, which is known as the chain of title.
Ideally, the chain of title is clear: Owner A sold to Owner B, Owner B sold to Owner C, and so on. That said, there are instances where property titles aren’t so clear or contain incorrect information about a property’s features or ownership. These titles are said to have “clouds” on them, which is just another way of saying the title is defective and needs correction.
Why Are Clouds on a Title a Problem?
If a property has a cloud on its title, the seller may not have the legal authority to conduct the transaction. This is because a cloud usually means that there is some unresolved issue concerning the property’s ownership or a debt owed by the seller that uses their real estate as collateral (a lien).
If a seller defaulted on their mortgage, for example, their mortgage lender may have started foreclosure proceedings. If foreclosure is underway while the transaction is attempted, or if the foreclosure was never fully resolved, this could cloud the property’s title.
Likewise, if a married couple buys a home together, Spouse A and Spouse B both appear on the title. If they divorce and Spouse A is awarded the home, but Spouse B still appears on the title, then Spouse A may not be able to sell the property until the title is cleared.
Hire a Real Estate Attorney for Help
Real estate attorneys know how to handle clouds on titles. Some may be fairly routine to deal with, while others can take some experience and legal finesse to resolve.
Here are some of the things an attorney can help you do:
- Conduct a title search. This is the process of pulling the property’s title from the county or city’s records.
- Perform a title review. This is the crucial process of going over each detail in the title to look for clouds and other deficiencies that can complicate the transaction process.
- Execute a Deed of Reconveyance. If the property is securing a mortgage that was paid off but the lender still appears on the title, then a deed of reconveyance must be executed to remove the lender and avoid conflicts caused by the old loan.
- Execute a Quitclaim Deed. This action involves contacting parties who appear on the title but don’t have rights to the property (such as an ex-spouse in a recent divorce) and instructing them to conduct a quitclaim deed. This removes from the chain of title.
- Remove Liens. Sellers with liens against their property must remove them by paying their creditors or finding a buyer who’s willing to assume liability for the liens.
- File a Quiet Title Action. If someone on a property title with no real ownership rights refuses to remove themselves from the title, then a quiet title action must be filed. This is a lawsuit where the plaintiff must prove their right to the property and have clouds on a title removed by the court.
Attempting to take on any of these actions on your own can be confusing, time-consuming, and risky. If you need help clearing clouds on a property title, get help from a real estate attorney who understands the process well.
Our attorney at Bundren Law Firm has decades of experience helping buyers and sellers in real estate transactions with title issues. If you want to learn more about how we can help you, reach out to us today!
Request a consultation with our attorney today by contacting Bundren Law Firm online!