Do You Need a Lawyer to Get a Clear Title?
Ensuring you have a clear title means you don't have to worry about future legal issues
By Andra DelMonico, J.D. | Reviewed by Canaan Suitt, J.D. | Last updated on September 4, 2024 Featuring practical insights from contributing attorney Jeffrey S. MarksUse these links to jump to different sections:
- What Is a Real Estate Title?
- What Is a Title Defect?
- Why Is it Important to Have a Clear Title?
- Common Reasons Why a Title Isn’t Clear
- How Do You Make Sure the Title is Clear?
- How to Clear a Clouded Title
- Do You Need a Lawyer to Review the Title?
- Find Experienced Legal Help
Buying a home is one of the largest purchases that most people make in their lives. So, it would be devastating to find out that you don’t have legal ownership or the property requires more investment than you can afford. One way to insulate yourself from this risk is to check for a clean title before completing the sale.
What Is a Real Estate Title?
The terms title and deed often get used interchangeably and are confused. However, a title and deed are separate legal documents. A deed is a legal document that transfers ownership from one party to another. A title is a document that lists who the owner of the real estate is. As the title holder, you have the responsibility, ownership control, and legal rights of the property. A real estate title can be held by an individual, multiple people, a corporation, or a trust.
What Is a Title Defect?
A title defect is a problem with a title that makes the property untradable or unsellable. The owner of the property would need to correct the problem before being able to sell it. When there is a defect with a title, that issue transfers to the new owner, becoming their responsibility. Depending on the title issue, it could result in significant financial costs for the property owner.
Why Is it Important to Have a Clear Title?
The real estate you purchase must have a clear title. A clear title means you don’t have to worry about future legal issues. This peace of mind allows you to enjoy your new real estate. When there are defects in the title, you may become financially responsible as the new owner. This could mean paying a real estate lawyer to represent you in court during an ownership dispute. Or it could mean paying to make a property compliant with the law.
“Getting a clear title is very important because of many things,” says Jeffrey S. Marks, a top-rated real estate attorney at Busse & Busse in Arlington Heights, Illinois. “The way property law works is that a lot of the issues affecting property follow the property, not the individual.”
Do not assume the current homeowner living on the property has a clear title. Potential issues could have not been discovered during the title search performed when the purchased the property. Alternatively, they could have taken action that caused the title to become clouded during their ownership.
If there is a lien on the property, there is a third party who has a claim to the real estate. A new owner cannot register a deed and take over ownership until the lien is cleared. As the new owner, you do not want to be subject to the previous owner’s lenders. In addition, the deed stating your ownership cannot be filed, meaning the real estate could be sold out from underneath you because there is no record that you bought the property.
Title Insurance
While a title search can give you confidence that the property has a clear title, it doesn’t fully protect you. Buying title insurance can give you an extra layer of protection. Often, a lender will require you to buy a policy from a title insurance company. Should someone claim ownership of the property or a defect arise, the insurance policy can protect you from being financially liable.
Common Reasons Why a Title Isn’t Clear
There are several reasons why a title may not be clear. Commonly, a cloud title results from ongoing legal processes or documents not getting filed with the county clerk. For example, the real estate could be stuck in probate due to a disputed will. Another common cloud on a title is liens, such as mechanic’s or tax liens.
Sometimes, the current property owner causes the title to become clouded. They could fail to pay their property taxes, perform work on the property without getting the required permit, or put the property in a condition that violates zoning laws.
A title can become clouded through dispute. Boundary disputes are common, especially when easements create encumbrances. The person using the easement claims they have a right to do so. Meanwhile, the new owner of the property does not want to honor the previously agreed-upon easement.
Sometimes, a title isn’t clear because of fraud. For example, there could have been a forged deed or other documents.
How Do You Make Sure the Title is Clear?
You can perform a title search if you want to confirm that a property has a clear title. Title companies will do the search for you. They will follow the chain of title to determine possible defects or issues.
Property ownership documents are public records managed by the county clerk. The county recorder makes them available to those looking to research titles. As part of the closing process, new ownership documents should be filed with the county clerk where the property is located. Some counties maintain an online database, making it possible to research the property’s title history online.
However, this search isn’t enough, as it does not tell you about the documents that were not filed. A more in-depth search of building permits, zoning rules, and documents can give clues to possible unfiled ownership interests.
If you plan to buy a property using a mortgage, the lender will require a title search to protect your interest. Generally, the borrower will pay for a title company or escrow agency to perform the title search.
How to Clear a Clouded Title
Several legal avenues can clear a clouded title. The solution used will depend on the issue clouding the title. One option is to execute a deed of reconveyance. You would use this document when mortgage lenders still appear on the title despite the loan being paid off. Doing this will reduce the risk of future complications from an old loan.
Another option is to execute a quitclaim deed. This deed is used when individuals or entities are listed on the title but do not have any rights to the property. Completing a quitclaim deed removes them from the chain of title by having them give up their claim to the property.
When a lien is on the property, the current owner must remove it or have the buyer agree to take on the lien’s liability. Since most buyers are not willing to take on another’s debt, the seller must remove the lien. They can do this by paying off the lender or providing the lender with a replacement collateral property.
The final method for fixing a clouded title is to complete a quiet title action. You may run into a situation where someone with no ownership rights refuses to remove themselves from the title with a quitclaim deed. In this situation, you can file a quiet title action. Essentially, this is a lawsuit where the plaintiff is proving your property ownership right. If successful, the court will remove the cloud from the title.
Do You Need a Lawyer to Review the Title?
While you can perform a title search on your own, this may not be the best approach. A title search company or real estate attorney will have the skills, experience, and knowledge to perform a more effective title search. Hiring a lawyer can help you gain valuable legal advice, which is well worth the upfront expense for long-term financial security.
Marks explains everything a real estate attorney does when representing a client in a real estate transaction where there isn’t a clear title. “So it’s the seller who clears the title. When I represent a seller, the first thing that I do when I get a contract is order title. I work with the title company to examine the title and see if there are any problems. If there are any issues—and there’s almost always some kind of issue—we do whatever is necessary to clear those liens.”
When deciding between a title search service and an attorney, you need to know the law in your state. Nine states require an attorney to be involved in the real estate transaction. This means you would have a lawyer in addition to a real estate agent working with you on your real estate purchase.
- Alabama
- Connecticut
- Delaware
- Georgia
- Kentucky
- Massachusetts
- New York
- North Carolina
- South Carolina
Some states, such as Maine and Maryland, have statutes requiring a lawyer to be involved in real estate transactions. Eight states specifically require an attorney to review and certify the title:
- Louisiana
- Mississippi
- North Dakota
- Oklahoma
- Rhode Island
- Vermont
- West Virginia
- Wyoming
Find Experienced Legal Help
If you plan to buy real estate, you need to protect yourself by having a title search performed. Even if your state does not require an attorney to review the documents, it is smart to do so. A real estate lawyer will know what to look for that could signal a title defect. Their years of experience with real estate law enable them to help you identify title defects and take the appropriate action to fix the defect.
Visit the Super Lawyers directory to begin your search for an experienced real estate attorney. For more information, read our guide on what a real estate attorney does.
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