A title is a legal document that proves ownership to property. Titles are used to reference ownership of real property, such as a home or a plot of land, and in some instances personal property, such as a motor vehicle.
Having a clear title means that whoever is listed on the title is the legal owner of the property, and there are no liens or encumbrances associated with the property. A clear title allows for the property owner to sell their property without issue. The terms “free and clear title,” “clean title,” and “good title” are also used to mean clear title.
What are Examples of a Clear Title?
One of the steps taken during the closing process of a home sale or purchase, typically includes the hiring of a title company. A title company assures the soon-to-be new owner of a home that there is no one else that has any kind of ownership interest in the home. This step, proof of a clear title, is important to promote a smooth transition during the home sale as well as prevent future issues for the new homeowner.
Another example, when a clear title is necessary, includes the sale of a car between private parties. If someone is selling their car, normally, they must provide the buyer with a signed clear title. In situations where a car loan is issued and not paid in full, a lien release must be obtained before a clear title is issued. It is important to obtain the clear title otherwise the bank that issued the loan continues to have legal ownership rights in the vehicle and can technically repossess it from the new owner.
What is the Difference Between a Deed and a Title?
A deed is a legal, written document that allows for the transfer of title (in other words, ownership) of a property. Depending on local statutes and regulations, the deed must be filed and recorded at the local courthouse or other designated office.
As noted above, a title to property proves ownership. Someone that owns a home outright, will have possession of both the property deed as well as the property title.
Why is a Clear Title Important?
Title issues associated with a property can pose major problems, especially, when it comes time to sell the property. Title issues can include: unresolved liens, questions of heirship with regard to previous owners as well as potential inaccuracies with regard to property surveys. If there is a legal possibility of someone else also staking an ownership claim to the property, then the sale cannot go forth before these issues are rectified.
There are many scenarios wherein a clear title may not be as apparent as a potential property seller and purchaser realize during their transaction. An unresolved lien on a property means that an interested party, such as the bank that loaned the money to the previous homeowner, can take title to the property, if payments were not made, and foreclose on the property.
If a homeowner passes away, it is possible for heirs to come forth and claim a right to the home or land left behind by the deceased. Another example of a potential issue that can arise, is if a neighbor has questions with regard to the accuracy of the property boundaries. The neighbor can potentially stake a claim to part of the property through proof of property surveys.
Most title issues that arise during the sale of a property or home can be resolved through the investigative work done by a title company. The title company will research all previous title claims and issues associated with the property. If any problems arise, the matter will be further researched and the majority of the time will be resolved. These issues may slow down the closing process and in turn delay the transfer of title from seller to buyer.
Should I Call an Attorney with my Clear Title Questions?
If you have questions regarding a clear title in reference to a home, plot of land, or other type of property, it is a good idea to discuss your concerns and questions with an experienced, knowledgeable, local real estate attorney. They can best advise and assist you to avoid unnecessary issues that may arise.
The purchase and sale of real estate and real property involve major investment decisions that can have a lifelong influence on all of the parties involved. Taking the extra step to discuss issues or potential issues with a real estate attorney, is a sound investment that can bring you peace of mind.
Clear title concerns regarding other types of personal property, such as a motor vehicle, can also be addressed with an informed, local lawyer that can expedite and streamline the transfer of ownership process.