What is a Quiet Title Action?
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Quiet Title Action Explained
A quiet title action is a legal proceeding that establishes the rightful owner of a property. In most cases, the plaintiff (the person filing the lawsuit) is either a potential buyer, the person in possession of the property, the legal owner, or the mortgage lender.
A quiet title action is a civil process, not a criminal one. State law decides who can file a quiet title action.
Once the judge decides the case, the “winner” of the quiet title action, they will typically be able to get title insurance on the property, borrow money against it, or sell it and convey the title free and clear.
When is a Quiet Title Action filed?
Some quiet title actions are “friendly,” which means they are filed to make sure there are no ambiguities or competing claims to the title.
For example, many real estate investors will file a quiet title action after a tax deed auction. A property sold this way often has one or more liens against it from mortgage lenders or other creditors. Even though the tax sale technically removes any and all interests in the property from other lenders and previous owners, it’s very difficult to verify that these previous lenders and owners were properly notified of the tax sale in accordance with state law.
Because of this uncertainty, most title insurance underwriters will not approve a title insurance policy until a quiet title action is completed to eliminate all prior interest through the proper legal channels.
Investors who acquire property through a quit claim deed (a deed that offers no guarantees to the new owner, and is generally used to transfer ownership of a property when the transferor’s interest in the property is unclear) will also often use quiet title actions to fix title defects. Once the title defects are resolved, the investor can sell the property with a warranty deed, because the quiet title action allows them to be certain that there are no liens or mortgages against the property.
What title defects can a Quiet Title Action solve?
Title disputes can happen in a number of situations. In addition to the issues above, here are a few scenarios when a quiet title action might be useful:
- When someone dies and leaves property to their heirs, the estate settlement process can open the door to title disputes. A quiet title action can ward off future challenges.
- If there is an easement where two properties share a driveway or entryway, a quiet title can settle disputes between the parties.
- Occasionally, problems with a survey can lead to boundary disputes, which can be resolved with a quiet title action.
- If someone pays off a mortgage or tax lien but the documents aren’t properly recorded, you can clear the title with a quiet title action.
- In issues of errors, fraud, or forgery with the deed itself, you may need to file a quiet title action to obtain a clean title.
Are there risks or limitations in a Quiet Title Action?
A quiet title action isn’t a speedy remedy to title defects. The process may take a year or more to complete.
A quiet title action can also be very expensive. Generally, all parties that have or may claim an interest in the property must be joined as a defendant. This means that lenders, taxing authorities, holders of easements, prior owners, title companies, and anyone else claiming an interest in the property, must be joined.
Legal jurisdictions may also have limitations on how a quiet title action can be used. For example, in some jurisdictions, a quiet title action may only be used to clear a specific title defect. In other words, it can’t serve as a blanket action to clear multiple potential title defects.
What are some alternatives to a Quiet Title Action?
When the chain of title is broken or there is a legitimate ownership dispute, a quiet title action is usually the most appropriate legal tool. However, there may be some circumstances when other viable solutions are available.
- In the case of a deceased person, opening or reopening a probate proceeding may solve some ownership disputes.
- When there is a disagreement between two people, it may be faster and easier to negotiate and pay a sum to settle and sign a legal document to resolve it, rather than going through expensive and time-consuming litigation.
- In some cases, if you purchase a foreclosed home, a title company may be able to do a post-foreclosure due process review to identify and fix title defects without a quiet title action.
Laws and processes differ from state to state, so you should consult a real estate attorney to discuss your options for resolving title defects.
Quiet Title Action vs. Quit Claim Deed
A quit claim deed is used to transfer whatever interest a party may have in real property, to someone else. If your situation can be solved with a quit claim deed, it is a faster, easier way to go. It is important to understand that if the transferor has no real ownership interest or any other interest in the property, a quit claim deed transfers nothing.
A quit claim deed may be enough to clear a title if the issue is one of spelling, wording, missing signatures, or recording of documents. For example, if the chain of title shows the spouse of a past owner didn’t properly execute a deed, a quit claim deed from the missing spouse to the present owner can remove any potential ownership interest.
A quit claim deed can be an effective tool to transfer ownership as long as the underlying title is clean. If there is a defect in the underlying title, you may need a quiet title action to correct it.
Quite often, people who buy property with a quit claim deed quickly go on to request a quiet title to ensure their title is clear.
Other things to know about Quiet Title Actions
A quiet title is an official recognition that your title to the property supersedes all prior claims to the property, including those made in the future by unknown lienholders or missing heirs, for example.
State law differs on who has the standing to file a quiet title action. In some states, only the titleholder can bring quiet title action. In a few states, anyone with interest in the property can file.
Reviewed by Mark H. Zietlow, Innovative Law Group