You may hear the term “tangled title” in the context of real estate transactions and wonder what it means.
Title is an official record showing who owns a property. When you purchase real estate, you will receive a document showing that you own the property. This is your title.
If you have a mortgage on the property, the bank holding your mortgage typically holds on to your title. You receive the title when you pay off your mortgage in full.
A tangled title situation occurs when there is a dispute over who owns a piece of real estate. For example, the person named on the title may not be the person who legitimately owns the real restate.
This can cause you major problems as the owner of the property. You may face trouble with selling the property or refinancing a mortgage.
Why tangled title situations occur
Not all real estate transactions are properly recorded or documented. A simple example is if a property is sold to someone who does not record the title with the appropriate local government agency. The title then reflects the name of someone who no longer owns the property.
Lack of an estate plan can also cause a tangled title. When a property owner passes away without an estate plan, such as a will or trust, the property could be inherited by several heirs.
If none of the heirs transfer the property into their name, title remains in the deceased property owner’s name. This type of tangled title scenario becomes even more complicated when it involves multiple generations and an outdated title has been on record for years or decades.
How to avoid tangled title
One of the easiest ways to avoid a tangled title situation is to properly record every real estate transaction you are involved in. This usually involves recording the deed and any other documents involved in the transaction with your local government office.
Having a solid estate plan in place reduces your chance of tangled title. Having a will or other estate planning document that clearly outlines how you want your property to be distributed upon your death shows how property should be titled.
Talk with your heirs about the importance of recording title. Emphasize how this reduces the chance of legal disputes and the threat of losing property.
Regularly review property records to verify the information is current and accurate. If you see something that is incorrect, you can potentially act on it before it becomes a problem.
Options for resolving tangled title
A common method for resolving a tangled title scenario is to file a quiet title action, which is a legal proceeding to determine who truly owns the property.
When the situation involves an inheritance issue, you or your heirs might need to resolve the issue in probate court. Mediation is another option to resolve the dispute if you want to avoid a courtroom.
Although you can take steps to avoid a tangled title, if you do find yourself facing a tangled title issue, it is best to address it quickly. Title issues are often complicated and the longer the issue persists, the more complex the situation becomes.