Are Clouds on Title Stressing You Out? Part Three
When buying distressed properties, clouds on title sometimes cause settlements to be postponed or even cancelled. In addition to old mortgages and unsatisfied liens and judgments, Estate issues can cause many transactions to be delayed.
Part 3 – Inheritance and Estate Issues
If the seller is an Estate or, if there was an Estate in the chain of title, documentation is needed to ensure that the person(s) who signed the deed had the proper authority to do so and further, that there are no missing heirs who can claim an interest in the property. In addition, most states collect inheritance taxes from the decedent’s Estate. If the Estate was not properly probated and inheritance taxes were not paid, the state may now have a lien against the property, and this lien does not have to be filed of record.
Other title issues stemming from the death of a property owner result from the deceased not having a valid will stating who is entitled to the deceased person’s property. To make matters more complicated, if the deceased was not the sole owner of the property, there can be disputes that arise as to whether the heirs are entitled to an interest in the property. If a deed properly defines the ownership interest as “joint tenants with right of survivorship”, then the property would automatically divest to the co-owner(s) of the property. Keep in mind however, that inheritance taxes may still be due on that portion of the decedent’s ownership interest in the property. If the property was held by a husband and wife as “tenants by the entireties”, then the property would automatically vest to the surviving spouse. Depending upon the laws of the state, the heirs may be entitled to an interest in the property if the ownership interest was defined as “tenants in common.” The laws regarding tenancy vary from state to state and the probate process will need to be followed either according to a valid will or, in the case where the decedent did not leave a will, the intestate succession laws of the state in which the property is located.
Generally, these issues can be resolved by tracking down death certificates, marriage certificates, wills, trusts, and probate filings, but the process of tracking down these documents can be time consuming and costly. When you are buying a distressed property, our team will verify that all the required steps to legally transfer the property out of the Estate were previously taken. We understand the urgency that buyers face in closing on time and with the least amount of risk. We will work with you to ensure that you have insurable and marketable title.