Before discussing defective titles or title defects, it is helpful to first understand deeds of title, titles, and the differences between them.
A deed is the legal document transferring the ownership of a home, or a piece of property, from one person to another. The physical deed document will generally describe, in writing, the exact location of the property, as well as the names of the former owners of the property and the names of the new owners.
There are many different types of deeds which may be utilized to transfer the ownership property from one person to another. However, all deeds must be signed by the person who is transferring the property to the new owner; additionally, the signature must be notarized in order to prove that the ownership transfer is valid.
A deed of title, or title deed, is a different and specific legal document that transfers the title of real estate from one person to another. Full ownership of a piece of real estate is given to the new owner. Generally, such a transfer would happen through a traditional real estate sale; however, there are other ways in which it may be transferred. An example of this would be when someone gives a piece of property to someone else as a gift.
Most commonly, the deed of title is classified as a general warranty deed. This is a specific type of deed in which the current owner guarantees that they hold a clear title to a piece of real estate. What this means is that they are not only guaranteeing that they received a clear title from the previous owner of the property, but that no other people retain any interest in the property.
A general warranty deed is utilized for most real estate deed transfers, as it provides the greatest amount of protection of any deed. It may also be known as a grant deed in some states. It is important to note that deeds of title should not be confused with a deed of trust. A deed of trust simply grants a lender or mortgage lender a lien on the property, if a debt is owed.
The actual deed itself, and having title to a piece of property, are different from each other. A deed is the actual legal instrument or written document, conveying the ownership of property from one person to another. When you are buying a home, you will be signing the deed to the home, which then creates your right to claim ownership of that house.
A title refers to a legal relationship between a person and the land that they own, which creates a right to that specific piece of property. An example of this would be obtaining a loan from a bank in order to purchase a piece of property. The bank will hold title to the property until the loan has been paid off in full; then, the bank will transfer the title to the property to you as the borrower.
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 that piece of property. In order for a title to be considered valid, that title must be free of defects. If a title is considered to be defective, the seller of the property may be required to “clear title,” or remedy any and all title defects, before the seller can legally complete the sale of their property to a buyer.
The following types of title defects exist:
- Superior Claim To Ownership By Another Person Or Entity: A creditor, or someone to whom an owner owes a money judgment, may have a superior claim to someone who is seeking to purchase a piece of property. A creditor protects their interest in the property by filing a lien in the county land recording office. As such, the would-be seller of the property must pay off, or satisfy, this lien before the buyer can purchase the property;
- Mistake In The Description Of The Property In The Deed: A deed is required to accurately describe the property’s boundaries. If the deed fails to sufficiently identify a piece of property, or otherwise inaccurately describes the piece of property, there is said to be a defect in the title;
- Another Mistake In The Deed: An example of another mistake or defect in the deed would be when either the person who granted the property to the current owner, or the current owner themselves, fails to sign the deed or fails to date the deed;
- Failure To Record A Deed: When someone files a copy of the deed to their property with the county land recording office, the law considers this as having given notice to the entire world of the fact of the ownership interest. Such notice is referred to as “constructive notice,” meaning that although the filing does not provide actual notice to a specific person, the law considers that notice to be actual; and/or
- The Property Is Subject To A Mortgage: If the property’s owner took out a second mortgage on the property, and then failed to record that mortgage, then the title is considered to be defective. Although a buyer can assume a mortgage, meaning to purchase the property while agreeing to pay off that mortgage, the buyer is not legally required to do so.
Are There Any Remedies For Defective Title Or Title Defects?
Before attempting to sell the property, you should conduct a title search. A title search is generally conducted by the company known as a title company by going to the county land recording office in order to review deeds associated with the property. They will also search the grantor-grantee index, which consists of two lists of property transfers.
One list is an index of grantors, or sellers. The list is maintained, generally by last name, of all parties who have previously sold the property. The second list is an index of grantees, or buyers. This lists all people who have purchased the property. Additionally, the title company will conduct a search of court records in order to determine if there are any liens or judgments against the property.
Once an owner is made aware of any title defects, the owner can attempt to remedy the defects. Liens are remedied by paying off the debt that is held by the lienholder. Improper descriptions of the property in the deed can be remedied 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.” That document is then recorded with the land records office.
However, not all title defects can be easily cured, or remedied. When ownership of property is disputed, the person who is claiming ownership may need to file a lawsuit in court, which is known as a “quiet title” lawsuit.
In quiet title the lawsuit, the owner will present evidence that their claim to the property is superior to that of a lienholder, holder of a mortgage or, whomever else is claiming an interest. If the owner is successful in their claim, the owner will receive a declaration from the judge. This order will state that the owner is the lawful owner of the property. Once received, the owner should ensure that this order is recorded, so others are put on notice of their ownership.
Do I Need An Attorney For Defective Title Or Title Defects?
If you are involved in a real estate transaction and are experiencing issues related to defective title, or other title defects, you should consult with an experienced and local real estate lawyer. An attorney can help you understand your legal rights and options according to your state’s real estate laws, and will also be able to represent you in court, as needed.