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How to handle a cloud on the title of an investment property

On Behalf of | Jan 6, 2021 | Real Estate |

Title: How to handle a cloud on the title of an investment property

When ownership of a piece of property in New York is unclear, any transactions can become complicated, leading to derailed projects and long-term disputes. Titles, deeds, right of way and a broad range of other issues can result in lengthy negotiations.

According to Bankrate, a cloud on title is a lien, unresolved claim or other property encumbrance. If you have a mortgage with an encumbrance, you cannot sell the property without clearing the title. This includes legal judgments related to the property and IRS liens. When this happens, you have three options, cancel the sale, pay off the debt to lift the lien or bring a quiet title lawsuit to clear the encumbrance.

What is a quiet title suit?

This legal proceeding can “quiet” certain claims and help clear a title if there are title defects, disputed interests or multiple claimants. It can also resolve issues such as the following:

  • Errors on the deed
  • Easement concerns, such as a shared driveway
  • Removing previous claims of ownership after probate or an estate sale
  • Erroneous boundaries resulting from incorrect surveys or related issues

A quiet title action frequently results after the purchase of a property in a tax deed sale. Although this kind of sale typically overrides previous liens, the claim remains on the title until removed through title certification or quiet title action.

What are requisites for quieting a title?

Before bringing a suit, the complaint must list all individuals or entities claiming an interest in the property and the documentation must present facts of adverse possession, if appropriate. The date as of which you seek the determination and the legal description of the property, including the address or common designation, is also required.

A quiet title claim frequently occurs when the real property in question is the focus of real estate investment. Learn more about some of the issues you may face when purchasing a property with a cloud on the title here.

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