Title Troubles
By Jim Palmer Jr.

In the early stages of a recent real estate transaction the title report revealed a couple of title defects.  Both title exceptions were documenting previous ownership and the mortgages that were long since paid off, but fulfillment deeds had never recorded.  After intense investigation, the seller found that one of the parties had signed a fulfillment deed when the second contract was paid off, but the buyer had never recorded it at the court house.  Concerning the other evidence of a prior mortgage, the seller was dead and no heirs could be found. 

This meant the seller could not offer a clear title to the buyer and so the buyer quickly rescinded the transaction and went to look elsewhere.  The seller is left with virtually one alternative.  That is to initiate a type of lawsuit called a “quiet title action”.  Of course this costs thousands of dollars which the seller doesn’t have in hand so they must scrimp and save first in order to fund a solution to the problem before they can sell the property.
A quiet title action is sometimes necessary when; filing or transcription errors resulted in incorrect title records, when there are outstanding liens on the property such as in the example above, where there are unrecorded transfers of ownership, conflicting surveys or boundary disputes, or unenforceable transfers of ownership involving owners who lack mental capacity. Sometimes there are multiple parties claiming ownership of the same parcel, such as a plethora of possible heirs.

The goal of this type of lawsuit is to settle all known and unknown claims, thus quieting the title for a specific owner.  Quiet title cases go in front of a judge who decides what is fair considering all of the circumstances.  If someone claims to have an easement or claims a fence is not the boundary, or claims their uncle deeded the property to charity, then a judge can exercise the courts equitable power to quiet the title. 

The cost for this type of action is largely undeterminable until an attorney can investigate all of the probabilities and guesstimate the amount of billable hours it will take to get it to court.  I’ve seen costs for this type of action range from $2,000 up to $6,000.  Sometimes the most onerous cost is the time (several months) it takes to accomplish this task.  If buyers aren’t willing to wait, sellers could lose out.