Property Titles

Behind every property transaction is a legal structure that determines who truly owns the land, and how securely. At the heart of this legal structure is the property title. Whether you are a homebuyer, investor, or heir, understanding how property titles work helps you protect your investment and avoid costly mistakes.

What is a Property Title

A property title refers to the legal right of ownership of a piece of real estate. It is not a physical document but the bundle of legal rights indicating the entitlement to own, use, and control a property

When a person "has title", they have the right to:

• Possess and live on the property.
• Use it within legal boundaries, such as renting it out, farming on it, and building on it.
• Transfer it, such as sell, gift, or leave it to heirs.
• Encumber it by using it as collateral for a loan.

Chain of Title and Ownership History

The chain of title is the documented sequence of transfers and other recorded events that indicate how ownership has passed from the original owner to the current one. Hence, every time a property changes hands, through sale, inheritance, foreclosure, or court action, it creates a record.

A clean, continuous chain of title with properly executed and recorded documents makes it easier to prove ownership and reduces the chance of surprises.

A typical chain of title includes:

• The original grant or patent for the land
• Successive deeds showing each sale or gift
• Mortgages, satisfactions, releases, and reconveyances
• Easements, restrictions, and other recorded covenants that run with the land
• Recorded judgments, tax liens, or bankruptcy filings that affected owners

Clear Title vs. Clouded Title

Clear title, also called marketable or good title, means that there are no outstanding legal claims, liens, defects, or unresolved questions that may prevent an owner from selling or mortgaging the property. It means the owner can confidently sell, mortgage, or pass the property to heirs.

A clouded or defective title contains unresolved issues, which may prevent the owner of the property from selling or borrowing against the property. These issues include the following:

• Unknown liens or unpaid taxes
• Boundary or survey conflicts
• Disputes over ownership
• Missing or unrecorded deeds

Title Search Process

A title search is a formal investigation into public land records to determine the chain of title and identify encumbrances that affect ownership. It is typically done before a real estate transaction closes and by a title company or real estate attorney.

The search verifies:

• Current ownership and deed history
• Outstanding mortgages or liens
• Tax status
• Easements or use restrictions
• Judgments or legal claims

Title Insurance

Title insurance is a one-time premium paid at closing that protects owners and lenders from covered losses arising from title defects that exist at the time of closing but were unknown or undiscovered during the title search. Such defects include:

• Forged documents
• Unrecorded easements
• Misfiled records
• Unknown heirs or contested wills
• Errors in legal descriptions or past deeds

There are two types of title insurance:

• Owner's Title Insurance: Protects a purchaser's equity and right to possess.
• Lender's Title Insurance: Required by most mortgage lenders to protect their loan interest.

Title Disputes and Risks

Title disputes occur when two or more parties claim an interest in the same property or when defects in the record raise questions about who has the right to possess or convey the land.

Title disputes can arise from:

• Conflicting wills or probate decisions
• Boundary line disagreements
• Fraudulent transfers or forged deeds
• Divorces or business dissolutions with unclear asset division
• Adverse possession, such as long-term use without legal title

Resolving title disputes may require negotiation, corrective recordings, payment of liens, or litigation. These may result in delayed sales or refinances or loss of property.

Lien Impact on Title

Liens are legal claims against property to secure payment of a debt. It attaches to the title, not the person. Hence, when an individual buys a property, they risk inheriting the lien unless it is removed.

Common liens include the following:

• Mortgage liens: A mortgage lien is a voluntary claim placed by a lender on a property as collateral for a home loan.
• Property tax liens: When a property owner fails to pay local property taxes, the government places a tax lien that takes priority over most other liens.
• Mechanic's liens: A mechanic's lien is filed by contractors or suppliers who haven't been paid for work or materials on the property.
• Judgment liens: This lien results from a court ruling in favor of a creditor who sued the property owner for unpaid debts
• HOA liens: Homeowners associations can place a lien when dues, fees, or fines go unpaid.

Before closing, liens must be satisfied by paying off the debt, releasing it, or insuring against it via title insurance. Failing to address a lien can result in foreclosure, even for a new owner.

Inheritance and Title Transfer

Title can transfer on death through a will, trust, operation of law (for joint tenants with rights of survivorship), or intestate succession when there is no will.

Note that:

• Joint tenancy passes automatically to surviving joint tenants without probate.
• Tenancy in common interests pass through probate or by will and can be inherited by heirs.
• Properties held in trust generally avoid probate and pass according to the trust terms.
• Probate court actions may be necessary when heirs dispute ownership or when there are creditor claims against the decedent's estate.

Common Title-Related Questions

The following are frequently asked property title questions.