What Is a Clear Title?
A clear title is a title without any type of lien from creditors or other parties that would pose a question as to legal ownership. For example, an owner of a home with a clear title is the sole undisputed owner, and no other party can make any kind of legal claim to its ownership. A clear title is also called a "clean title," a "just title," an "absolute title," and a "free and clear title.”
A clear title is necessary for any real estate transaction because it firmly establishes who is the property owner. Title companies must do a title search to check for claims or liens of any kind against a title before it can be deemed clear. Erroneous surveys and unresolved building code violations are two examples of blemishes that can make a title "dirty."
A clear title is necessary for any real estate transaction because it firmly establishes who is the property owner. Title companies must do a title search to check for claims or liens of any kind against a title before it can be deemed clear. Erroneous surveys and unresolved building code violations are two examples of blemishes that can make a title "dirty."
A clear title helps to show whether there are any outstanding financial responsibilities attached to the property and is necessary to demonstrate that an owner has the right to sell the property. The sale of a property can be disputed if legal ownership is not represented through a clear title. The presence of liens can create a cloud on the title when a claim or an unreleased lien invalidates or impairs the owner's title to the property. For example, the current owner may still owe payments on an outstanding mortgage or owe contractors for refurbishment work they performed on the property.
The title would not be clear, and the new owner would then be held responsible for resolving those liens. Once a title is cleared, the deed can be registered in the homeowner’s name. The deed is the legal document showing who owns a property. If someone is buying a home, the title must be clear before the new owner's name can be put on the deed. It's important to note that a property could potentially be sold while liens are active.
Reasons Why a Tide Isn't Clear
There are many reasons why a title search might come back listing the title as “unclear.” Just because someone currently lives in a home doesn't mean that the home has been titled or vested to that person, and when it comes time to sell the home, the buyer can run into problems with the title, meaning who owns the property is unclear.
Heirs
Complications can arise with older properties where the heirs of a prior owner may still have some claim to the real estate. For instance, prior owner may have granted a portion of a property to an heir who never took an active role as an owner. The said heir's rights as a partial owner may have passed on to their descendants, who might not be aware of the circumstance. Title problems can also arise if the heir to the property never filed the deed with the county clerk's office to transfer ownership.
When the heir goes to sell the property, title problems will occur, as the deed would still show the family member who willed the property to the heir.
Separation or Divorce
Title problems can occur in situations where a couple separated but never went through divorce proceedings. If the couple owned the home jointly and one person moved out following the separation, they would still own the house without a divorce.
As a result, title problems could arise when the person living in the home goes to sell the house because two people would be listed on the deed.
A Trust Ownership might have been transferred to a trust or another body with a legal claim to the property. This is why title searches are performed – to identify such issues before a potential buyer has committed funds to acquire a property.
Can I Buy a Home Without Clear Title?
No. You cannot purchase a home if it does not have a clear title. It is possible to identify any issues and try to correct them if you still want to purchase the home
What Are Some Reasons for an Unclear Title?
There are many reasons why an unclear title might not show up in a title search. It could be the property is old and the heirs to the property never properly filed the deed upon their inheritance. During a marital separation for example, a jointly owned home can cause a problem if two people are listed on the deed. In cases of fraud, a title may show up as unclear, as well.
Fraud
Possession of a clear title is also important to prevent instances of fraud. It's possible that a false deed may have been entered into the public record. A fraudster might attempt to use a false deed to engage in the illegal sale of properties.
Beware
There are many cases popping up today where scammers will steal your identity, steal your property and steal your money. Make sure your agent works with trusted companies that will work in your best interest.
Richie Vraux is a Real Estate Broker with Pine Tree Realty of Maine, 76 Tandberg Trail, Windham. If Richie can help you with your real estate needs, feel free to contact him at 207-317-1297. <
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