As we discussed in a prior post, there are three types of real estate deeds, each offering the deed-holder different rights and degrees of ownership of the property described. There are times when an owner discovers that they do not, in fact, hold a general warranty deed, but believe that they are entitled to hold complete and total ownership over property. In this situation and others, the owner would likely file what is known as an action to quiet title. The Maryland State Legislature recently passed a new law governing actions to quiet title which will go into effect on October 1, 2016. Learn more about quieting title and the changes brought by the new law, below.
Actions to Quiet Title
The fundamental purpose of an action to quiet title is to clarify what rights of ownership the person bringing the action holds over a given piece of land. Generally, owners file quiet title actions after some other individual or business entity claims to have a partial or total ownership interest in that property. A “cloud on title” is the term used to describe some assertion of ownership interest in a property that interferes with the complete ownership of the current deed-holder.
Title searches are part of the process of purchasing property. In a title search, an attorney will examine the public records on the property to determine if there are, for example, any unpaid liens against the property or loans taken out against the property, and to ensure that the chain of title (i.e., the history of prior owners) is clear and complete. While these searches are largely successful in determining that the buyer would have complete ownership free of liens or encumbrances, sometimes things manage to slip through the cracks. For example, a lien may not have been properly recorded against the property, making it so that the title search did not uncover it at the time of purchase. The owner would file an action to quiet title to clarify that they are the sole owner and are not responsible for the lien. Alternately, if the owner was unaware of an easement (i.e., a right of the government, the public or a private party to access a portion of the property), the owner could file an action to quiet title to clarify the existence or extent of the easement. In order to avoid these sorts of disputes, buyers typically purchase title insurance, so that the insurer is tasked with litigating quiet title actions.
What will the new law do?
In Maryland, owners had the right to bring quiet title actions for many years, but there was no section of the Maryland code of laws which directly addressed what was required to bring a successful action to quiet title. This resulted in uncertainty, especially for title insurance companies. These companies sometimes declined to insure title if they were unsure whether the title would later be challenged. Now, the process for filing an action to quiet title will be laid out in the law, eliminating the uncertainty surrounding how these lawsuits work and what the owner needs to prove to be successful. Additionally, the law clarifies what the effects are of a judgment in a quiet title action. Overall, the law should offer greater assurances to a good-faith buyer that their title is free of any liens, encumbrances, or other defects.
If you are in need of a Maryland real estate attorney for a purchase, sale, or quiet title action, contact the knowledgeable, experienced, and trial-ready Annapolis real property lawyer Matthew S. Evans III for a consultation on your claims, at 410-626-6009.