Real estate is one of the most valuable things you can own, so the last thing you want to discover is that you cannot sell, refinance, or transfer ownership of a property. If your property’s title is clouded, however, that’s exactly what can happen.
So, what is a clouded title? Well, a real estate title is what declares that you own a given property, and it can be clouded by anything from a clerical error to forgotten liens to surprise co-owners. These issues can put your ownership of the location into doubt, even if you have no doubt that you own it.
Clouded titles can make real estate transactions more complicated, but there are clear processes in place for resolving these issues. At Peterson Law, LLP, our clouded title lawyers in San Diego and Riverside can help you identify why your title is clouded and clear it through the appropriate quiet title action, so you can move forward with your life.
What Causes a Clouded Title?
A title is considered clouded when there is any recorded claim, error, or competing interest that makes it unclear who actually owns a property free and clear. In these situations, title companies will not insure them, lenders will refuse to issue mortgages or HELOCs, and buyers cannot close on sales. In San Diego, we’ve found that some of the most common causes of clouded titles include:
Old Liens
Liens may be placed on properties to prevent owners from selling or transferring ownership until they have satisfied debts or court orders. If old contractor liens or paid-off loans remain on a title, the property is stuck in limbo until the lien is officially recorded as “released.”
Recording Errors
Information about the property must be recorded correctly. If names are misspelled, signatures are missing, or the property is described incorrectly, a title search will find these problems and prevent transactions from moving forward until the clerical errors are resolved.
Unresolved Heirship
When a property owner dies without a will, or without the estate going through probate, ownership can pass to multiple heirs by operation of law, some of whom may not know they hold an interest, may be unreachable, or may disagree about what to do with the property. Until that’s sorted out, the title reflects an unclear or fractured chain of ownership.
Competing Ownership Claims
Disputed deeds, double conveyances, boundary encroachments, or someone asserting an adverse possession claim can all place a competing interest on record against your ownership.
Clearing a Clouded Title Through a Quiet Title Action
California law offers a specific path for clearing clouded titles: quiet title actions. These are civil lawsuits filed against all other parties who might have a claim on the property. The action requests that the court formally determines who holds the title and removes the cloud. It’s a court judgment that title companies, lenders, and buyers can rely on going forward.
A quiet title action typically involves identifying every party with a potential interest, whether that’s a lienholder, an heir, or a prior owner, formally naming them in the lawsuit, and, in most cases, recording a lis pendens to put the public on notice that title is in dispute while the case proceeds. Once it’s resolved, however, transactions can proceed as normal, in full confidence that you own the property.