What You Need to Know About Quiet Title Actions
By Cody McCaughan, Esq.
A quiet title action is a lawsuit in which the Plaintiff asserts that they possess good and marketable title to a certain property, thus putting the burden on anyone else who wants to claim ownership, lien rights, or some other right to the property, to join the lawsuit and prove their claim, or have it permanently extinguished. This is accomplish through serving all known persons who may claim interest in the property with the lawsuit, and publishing notice of the local in the newspaper. Common instances when a quiet title action becomes necessary include selling real property, purchasing real property at a tax or foreclosure auction, and ownership disputes between family members.
What is Title?
You either own a property or you don’t, right? Not exactly. If your name is on the deed, you are the record title holder, however, there are many different types of ownership of real property, all with different rights and claims. For example, when you give a mortgage over your house to a bank, it gives them certain rights. They do not have the right of possession, i.e., an employee from the bank cannot walk into your home and open up an office, nor do they have the right to sell your property. But they do have a right to force you out if you stop making your mortgage payments, or to file a lawsuit to prevent you from damaging or destroying the property, because the value of your property is what secures their loan. This is just one example of the multitude of different rights an individual or business may have over real property. In reality, most properties are owned, liened, or otherwise encumbered by multiple persons or businesses.
How are Properties Titled?
In addition to the various interests in real property that exist, real property can also be titled in many different ways: individually, jointly, through a business entity, or through a trust, just to name a few. This adds another layer to the complex nature of determining who has a claim to a property, and what rights they may have.
What is Marketable Title?
When a property is sufficiently clear of title issues to sell on the open market, the record owner is said to have “marketable title” to the property. When a property is involved in a title dispute, foreclosure, or it is otherwise not clear who owns the property after an examination of the property records, it is often said that there is a “cloud on title”. Properties with a cloud on title are very difficult to sell because title insurance companies will not issue a policy protecting the buyer of the property, making them very risky investments. If marketable title cannot be achieved through additional deeds, or other title instruments, being recorded in the property records, then a quiet title action becomes necessary.
Fixing Title Issues
Title issues are extremely common, however most can be resolved relatively quickly and easily. Every time a parcel of real property is being purchased, the closing agent will have a title search performed on the property, which almost always reveals one or two title issues that need to be resolved. After the appropriate documents are drafted and executed to the satisfaction of the title insurance company, the title issues are considered cured or avoided, and the buyer may then purchase the property with a title insurance policy protecting their investment. But on occasion, major defects arise in the ownership history of the property, known as the chain-of-title, resulting in the necessity of a quiet title action.
Resolving Title Disputes
While title issues and defects are fairly common, sometimes a parcel of real property becomes involved in full-blown title disputes. Title disputes arise when two different individuals or entities assert ownership, or some other major property right, over the same parcel of land. Often these disputes arise out of issues with fraud, or disagreements among family members, that affected the transfer or conveyance of the real property. If the parties cannot agreement on a resolution, then a quiet title lawsuit may be the only way to determine the true owner of the property.
How long will it take? How much will it cost?
The good news is that quiet title actions are not contested, meaning there is a title defect that needs to be cured, but no one else besides the record owner is claiming a real interest in the property. However, these uncontested quiet title actions are still lawsuits that must be researched, drafted, filed with the court, and carried through to a final judgment. While every case is different, a diligent attorney can probably complete an uncontested quiet title action in approximately three months.
If a quiet title action is contested, meaning that another party joins in the lawsuit and hires an attorney to fight for ownership of the property, then there is absolutely no way to predict how long the case will take. Depending on the parties willingness to settle, or lack thereof, the matter can sometimes take years to complete.
Most attorneys will charge a standard retainer to begin a quiet title action. While individual circumstances vary, the initial retainer will probably be in the range of $2,000 to $5,000. If the action is uncontested, this retainer may be sufficient to cover the entire lawsuit through final judgment. If the action becomes contested, attorney’s fees can easily reach tens of thousands if the parties are not able to workout a resolution.
While we always try to resolve title issues and disputes outside of court, if a lawsuit becomes necessary, we have the experience necessary to bring quiet title actions, and other lawsuits involving real property, to a quick and efficient resolution. If you believe a quiet title action is needed for your property, contact us at (305) 928-4190 for a consultation.