The title search turned up something wrong. What happens now?
Residential and commercial property purchases require a title search in order to ensure that you do not encounter any obstacles to owning the real estate free and clear. While most of these searches don't reveal any impediments to the buyer's ownership, it does happen.
If your title search reveals a problem with your property ownership, a legal process is in place to help clear the "cloud" on the title. What you may need is a quiet title action.
The basics of a quiet title action
This special legal proceeding involves a judge determining who legally owns a piece of property. The goal is to make sure that no one else can make a legal claim to ownership of the property you want to buy. A successful action removes ownership obstacles and gives you the freedom to purchase title insurance, which covers you if another, currently unknown, obstacle arises in the future to jeopardize your ownership rights.
A mortgage lender will require title insurance, and without it, you do not receive a marketable title to the property. Below are some of the common situations that could arise during a title search that require a quiet title action to clear:
- Recording errors for mortgage liens, tax liens and easements
- A deceased homeowner's heirs claiming ownership
- No evidence of paid-off mortgages or taxes
- Possible claims from lessees, heirs or lien holders of unoccupied properties
- Questionable quitclaim deeds
- Inaccurate surveys
- Current or previous boundary disputes
- No clear indication of complete or correct parcel information
- Previous forgery or fraudulent transfers of the property
If you are purchasing a piece of property in a sheriff's sale, foreclosure sale, tax sale or estate sale, you may want to file a quiet title action as a preventative measure to make sure no one can come back later and make a claim to the property. Even a typographical error can put your ownership rights in jeopardy, so clearing it up is essential.
Pursuing a quiet title action
You may not always have the opportunity to file an action against the prior owner of the property when you must file a quiet title action. Moreover, if multiple issues exist with the title, you may only be able to deal with one of them at a time. However, you will have to go through the process in order to receive a clear and marketable title, along with title insurance. Fortunately, you don't have to go through the process alone.