An action to quiet title is a court procedure required to obtain an order from the court confirming that a party has a right to their real estate, free and clear from all other challenges or claims to title. Essentially the legal action “quiets” property title disputes and is otherwise known as a quiet title lawsuit.

Quiet title actions are  common after a Michigan property tax sale or auction of real estate. They’re used to negate any procedural issues about the tax sale of real estate, ensuring that the county clerk performed the tax sale in accordance with Michigan statutes. When real property is sold at a tax deed sale, the effect is to eliminate any claim that the prior owner or mortgage holder or lien holder may have to the title. When a successful bidder at a tax deed sale obtains the deed to real estate, it should be free and clear of any other liens or encumbrances, except for certain excluded liens for municipalities, etc. Unfortunately, the buyer of real estate after a tax sale does not have “marketable title” unless a quiet title action is performed. A title insurance policy will not cover real estate subject to tax sale until any potential adverse claims against the property in question has been litigated.

Why is a Quiet Title action important?

If the matter involves a former tax sale, the buyer of a tax deed property cannot obtain title insurance bought at a tax deed sale until a complaint to quiet title action is filed and an court order is issued. Without a title insurance policy, it is difficult to sell or finance the tax deed property until a legal proceeding is initiated.  In a standard Michigan real estate transaction, the buyer will insist upon title insurance in order to insure the title to the property for the amount of the purchase price. Likewise, if a successful bidder of a tax deed property wants to refinance the property, a lender institution will also require a title policay to insure title for the mortgage.  A quiet title attorney will file a quiet title complaint against any potential claim and ultimately secure clean title. 

Sometimes the title issues have nothing to do with a county tax sale.  Perhaps there is a defect in the title that requires a final order from the court. The reasons for defects are endless, but the most common are lack of discharge, challenge to boundary lines, and challenge to title ownership. These are known as clouds on title and must be removed in order to ensure that the transfer of title is free of futher ownership disputes.  Once a court action is successfully maintained and legal ownership is determined, then the title records will reflect the courts order.  When a court makes a finding in favor of the marketability of real estate,  the title company  and their real estate lawyer can be assured that no additional claims or further active disputes surrounding a property’s  marketability can be made.

Call David and his title attorney team to discuss whether a quiet title action is even appropriate for your specific circumstances.  Soble Law regularly handles properties with defective titles, clouded titles.  When there is a major title problem, we obtain insurable title for our clients. 

Top 10 Title Problems 

Title insurance is important for new homeowners to have because, while the home may be new to you, the property will have an entire history of its own that may be unknown to you. Conducting a thorough title search can help you discover any title defects that may be tied to your newly purchased property. Depending on the title insurance you have, you need to know that a title commitment protects the home owner  against title problems that arise only after you have closed on the property. Below are the top ten common title problems that may arise in purchasing a property

1. Errors in Public Records: Clerical or filing errors can easily occur. Everyone is human, and everyone makes mistakes. However, these kinds of errors can affect the deed or survey of your property, causing undue financial strain while you try to resolve these mistakes.

2. Unknown Liens: Unless you are purchasing a brand new home, it is likely that someone owned the property before you. The prior owners of your newly purchased property may not have been thorough bookkeepers or bill payers. Even though the former debt on the property is not your own, banks or other financing companies can place liens on your property for unpaid debts even after you have closed on the same. This is a particularly worrisome and burdensome issue with certain distressed properties.

3. Illegal Deeds: Sometimes, the chain of title on your property may appear perfectly sound. However, it is possible that a prior deed was made by an undocumented immigrant, a minor, a person of unsound mind, or one who is reported single but in actuality married. These instances can affect the enforceability of prior deeds, thus affection prior or present ownership.

4. Missing Heirs: When a person passes, the ownership of their home may fall to their heirs or the individuals named in their will.  In order for property to transfer through a will, it must be probated.  However, these heirs are sometimes unknown or missing at the time of the person’s passing. In other cases, family members may contest the will for their own property rights. These scenarios create both probate and real estate litigation, which can occur quite a long time after you have purchased the property.  This may affect your rights to the property.  

5. Forgeries: Sometimes, unfortunately, we do not live in a completely perfect and honest world. Therefore, sometimes, a forged or fabricated document that affects property ownership is filed within the public record. This obscures the rightful ownership of the property. We call it “clouding title.” Once these forgeries come to light, your rights to your home may be in jeopardy.

6. Undiscovered Encumbrances: When it comes to owning a home, three is a crowd. At the time of purchasing the property, you may not know that a third party holds a claim to all or part of your property. This could be due to a former mortgage, lien, or non-financial claims like restrictions or covenants limiting the use of your property.  Remember, just because a person has actual possession of a home, it does not mean they are vested fully in legal title. 

7. Unknown Easements: While you may own your new home and its surrounding land, it is possible that an unknown easement may prohibit you from using the property and land as you would like. It could also allow government agencies, businesses, or other parties to access all or portions of your property. While usually non-financial issues, easements can still affect your right to enjoy your property.

8. Boundary and Survey Disputes: Prior to purchasing the property, you may have reviewed and seen several surveys of the property you intended to purchase. However, it is possible that other surveys exist showing a differing boundary line from the one you observed on the surveys that you reviewed prior to purchasing the property. Therefore, a neighbor or other party may be able to claim ownership to a portion of your property.

9. Undiscovered Wills: When a property owner dies with no apparent will or heir, the state may sell the property owner’s assets. This includes the home. When you purchase such a home, you assume your rights as owner of the property. However, even some years later, the deceased owner’s will may come to light and your rights to the property may be in serious jeopardy.

10: False Impersonation of Previous Owner: Lastly, common and similar names can make it possible to falsely impersonate a property owner. If you purchase a home that was once sold by a false owner, you are at risk of losing your legal claim to the property.

Conclusion

These top ten issues, and others, are often covered by an owner’s policy of title insurance. Therefore, when you decide to purchase a home, make sure you purchase title insurance to protect your rights to the property. If you are unable to obtain title insurace,  it is because the title agent questions the marektability of th title to the property.  It is then that you will have to initiate your quiet title action with a real estate attorney.