Documents involving title are arguably the most important documents in real estate, as they show legal ownership of property. A “clear” title indicates there are no liens, levies, or other impediments and “clear” title allows an undisputed owner the right to sell the property.
Before selling, owners must clear title (or show proof of clear title) to real property so the transaction can proceed, and the new owner’s name can be put on the deed. What’s involved may surprise you.
Read on to learn more.
Discharging a Mortgage
A mortgage is simply a consensual property lien, so clearing title is fairly easy if this is the only lien in place. It also does not affect the marketability of the property, as mortgages are incredibly common. Mortgages can be discharged by satisfaction, by court order or occasionally via a third party like a title insurer.
Borrowers can fully repay the mortgage loan with the sale of the property, and the lenders will record a satisfaction, releasing the lien in the process. Alternatively, borrowers can speak with their lenders about their intent to sell the property, and the lender can release the lien. This does not mean the borrower is no longer responsible for the outstanding balance of the loan, but it clears title for an upcoming sale.
Resolving Legal Property Description Disputes
The legal description of a property can make or break a clear title. Inconsistent descriptions on the deed, adjustment of maps over the years and other errors affect what can be considered the property. For clerical errors in a legal description, an experienced Arizona real estate attorney or title company can correct the mistake and add the updated version to the loan documents or conveyance deed.
Foreclosure and Clearing Title
There is an outdated assumption that a title will clear upon the foreclosure of a property, but this is not the case. Unpaid taxes, sewer liens, IRS liens and other issues that cloud title are frequent surprises when buying a foreclosed property.
Some of these liens are passed along when the property is sold, so interested parties should always run title before moving forward with the sale.
Clearing Property Liens
In Arizona real estate transactions, parties may discover a lien against the property that must be “cleared” before the property can be sold. The state generally recognizes these types of property liens: Consensual (such as mortgages), HOA (which secures compliance with CC&Rs), Judgments (which are placed against civil court defendants), and mechanics (which ensure payment for labor).
These can be cleared with negotiation or by proving them to have been filed in error. If a relevant party believes the lien was wrongful, fraudulent or inaccurate, they can seek legal counsel.
Find An Experienced Phoenix Real Estate Attorney
If you are involved in a dispute about property liens, experienced legal representation is of the utmost importance. Property owners in a potential dispute should work with a cost-effective legal team that can evaluate your potential case and break down the best approach to the case.
MacQueen & Gottlieb has significant experience with resolving legal disputes involving real estate and making sure clear title is permanently established. Contact us today at 602-562-7218 to schedule an initial consultation or make an appointment online.