What is “title”?
Title refers to the official record of who owns property. When you buy a home, whether it’s a single-family house, an apartment or something else, you should receive a document that shows that you are the owner of that property. That document is called the title, and a record of the title is filed with the county clerk in the county where the property is located.
If you’ve taken a mortgage to purchase the property, the lender will often hold the official title document until the mortgage is fully repaid, but a record of your ownership is still filed with the county clerk. A record of the loan and the lender’s interest in your property is filed along with the title.
How does title get tangled?
A tangled title typically arises in the following scenarios:
Inheritance issues
When a property owner passes away without an estate plan, and sometimes even with an estate plan, the property may be inherited by multiple heirs. An estate plan can include a will, a trust or a transfer-on-death designation.
If the heirs do not take the necessary legal steps to transfer the title into their own names, legal title remains in the deceased person’s name. This can be especially problematic if more than one generation has passed from the original owner’s death, for example, if now grandchildren or great-nieces and nephews reside in the property that is still nominally owned by their grandparent or great-aunt or great-uncle.
Even when the heirs do take the necessary steps to take title in their names, having multiple owners can significantly increase the likelihood that the home’s value can be lost through tax default, land speculation, partition sales or otherwise.4
Lack of proper documentation
Sometimes, property transactions are not properly documented or recorded. For example, if a property is sold but the deed is not recorded with the local government, the title of record remains in the previous owner’s name.
Unresolved legal matters
Legal disputes, such as those involving divorce or business partnerships, can also lead to tangled titles if the ownership of the property is not clearly resolved.
Practical steps to help avoid tangled title
Properly record transactions
Always ensure that any property transaction, such as a sale or transfer, is properly documented and recorded with the appropriate government office. This includes recording the deed and any other relevant documents.
It’s essential to note that having an estate plan is important, but it’s equally important to ensure that the appropriate fiduciary of your estate plan (i.e., executor, administrator or trustee) records a deed reflecting the transfer of ownership from the deceased person to his or her beneficiaries.
Use professional services
When dealing with property transactions, it is advisable to use the services of professionals such as real estate agents, attorneys and title companies. They can help ensure that all legal requirements are met and that the title is properly transferred.
Regularly review property records
Periodically review the property records to ensure that the title is accurate and up-to-date. This can help identify and address any potential issues before they become problematic. Property records are usually maintained in the county where the property is located, and many counties have made their records available online.
The sooner you identify and deal with any issue, usually the easier it is to achieve a positive resolution. The longer the problem of tangled title goes on, the more people are often involved and therefore the harder it is to solve without having to go to court, which can be both expensive and time-consuming.
