 Personal Finance PowerPoint Presentation Clear Title Get ready to get financially fit by practicing personal finance. Most of this information can be found at Investopedia Clear Title, which you can find online. Look at the references, resources. Continue your research from there. This is by James Chan, updated March 27, 2022. What is a clear title? A clear title is a title without any type of lean or levy from creditors or other parties that would pose a question as to the legal ownership. So clearly if we're talking about a sales type of transaction, if you're trying to make a purchase of property, then you want to be able to know that you're going to have the claim to that piece of property, and those claims can get quite complex given the fact that the land here has been here for like a long time. People have made multiple claims, possibly on the same piece of land that you might be taking a look at. You would like to make sure that your claim is the right claim is a clear claim. For example, an owner of a home with a clear title is the sole undisputed owner, and no other party can make any kind of legal claim to its ownership. A clear title is also called a quote clean title in quote or a quote just title in quote and a quote free and clear title in quote. So you could see these different terms giving you kind of an indication of what we're talking about here. Is there someone else that basically can have any kind of legitimate claim to this piece of property? That's going to be important to the value of the property. We want the clean title. We want the just title. We want a free and clear title in other words. A clear title is necessary for any real estate transaction because it firmly establishes who is the property owner. That's going to be important. Otherwise, there's going to be a lot of arguments over stuff. So we need to get that kind of thing straight. So title companies must do a title search to check for claims or liens of any kind against the title before it can be deemed clear, meaning any other claims against basically the property. Aronius surveys and unresolved building code violations are two examples of blemishes that can make a title quote dirty in quotes. If you've got the dirty title, then you've got some questions about it. That's going to of course cause problems in a sales transaction. How a clear title works. A clear title helps to show whether there are many outstanding financial responsibilities attached to the property and is necessary to demonstrate that an owner has the right to sell the property. So obviously, like kind of like that bridge when someone tries to sell you like the Golden Gate Bridge or something, well, they can't because they don't have the title to it. Obviously, they need to have the title to it. So we've got to understand who owns the bridge or in this case the house or the piece of property, the land and whatnot. So the sale of the property can be disputed if legal ownership is not represented through a clear title. The presence of liens can create a cloud on the title when a claim or an unreleased lien invalidates or impairs the owner's title to the property. Clearly, if there's problems there, then that's an issue. For example, the current owner may still owe payments on an outstanding mortgage or owe contracts for refurbishments work they performed on the property. The title would not be clear and the new owner would then be held responsible for resolving those liens. So obviously, again, that can be an issue and these kind of items if you were to have a mortgage on the home something like that from the one item and they clearly if there was no payment on it then it's possible that the home was the recourse on that particular loan and then if that person tried to sell the home without paying the loan and so on then you can see that the creditor would want to have claim to the recourse which was the home and you can see messy, dirty, dirty everything gets dirty in that case dirty title as opposed to the clean one. So once the title is cleared the deed can be registered in the home owner's name the deed is the legal document showing who owns a property so you got the deed showing that you own it and so there it is. If someone is buying a home the title must be clear before the new owner's name can be put on the deed it's important to note that a property could potentially be sold while liens are active the law doesn't require liens to be removed before the sale of a property however the buyer wouldn't be able to get a mortgage or home equity loan because the bank would research and discover the past liens which would have to be cleared for the financing to go through so clearly most of the time you want a clear title and if you're looking for financing if you're not paying with straight cash for example then you'd almost have to have the clear title because the lender is not going to want a dirty title because they're going to be using the house as collateral in the event that you don't pay back the loan and they want to make sure the collateral is clear so that they lower the risk on their end so number four reasons why a title isn't clear so there are many reasons why a title search might come back listing the title as unclear just because someone currently lives in a home doesn't mean that the home has been titled or vested to that person so the fact that someone's living there the finders keepers kind of thing doesn't totally hold up that's kind of part of the legal system I guess but just being the finders keeper doesn't always work it's not like exactly a legal term so when it comes time to sell the home the buyer can run into problems with the title meaning who owns the property is unclear errors, complications can arise when older properties where the errors of a prior owner may still have some claim to the real estate so now you've got, it gets complicated when people die and stuff and property and what not and who has ownership to the property and multiple people could possibly claims and it gets all messy dirty, the title gets dirty for instance a prior owner may have granted a portion of the property to an heir who never took an active role as an owner the said heirs rights as a partial owner may have passed on to their descendants who might not be aware of the circumstances so you can see how this can get messy quickly title problems can also arise if the heir to the property never filed the deed with the county's clerk office to transfer ownership when the heir goes to sell the property title problems will occur as the deed would still show the family member who willed the property to the heir so fraud could be an instance that would be an intentional deceit, deceit intentionally made for profit or some benefit so possession of a clear title is also important to prevent instances of fraud it's possible that a false deed may have been entered into the public record so someone could try to cheat the public record with a false deed in there a fraudster might attempt to use a false deed to engage in the illegal sale of a property so they're gonna try to sell you that golden gate bridge with a false deed I know you don't own that bridge that bridge isn't yours so separation or divorce title problems can occur in situations where a couple are separated but never went through the divorce proceedings so clearly if you got a separation type of situation again you've got the marriage and then you've got the joint kind of property to be dependent on the states whether it be a community property state and so on and then with divorce what happened with the divorce was everything handled properly with regards to the splitting now back into the two so if the couple owned the home jointly and one person moved out following the separation they would still own the house without a divorce as a result title problems would arise when the person living in the house goes to sell the house because two people would be listed on the deed a trust you got the ownership might have been transferred to a trust or another body with a legal claim to the property so a trust is like an entity you can think of it kind of like a corporation you're given like human beings properties to the trust the trust now owns the property this instrument owns the property so this is a way this is why title searches are performed to identify such issues before a potential buyer has committed funds to acquire a property what does clear title mean a clear title means that a property does not have any liens on it nor does it have any issues surrounding ownership so can I buy a home without a clear title no you cannot purchase a home if it does not have a clear title so generally you got to you're going to need the clear title going through the process especially because of course you're going to probably need a loan in that event the bank is going to want the clear title for financial institution the lender in other words it is possible to identify any issues and try to correct them if you still want to purchase the home so you're going to say I still want it even though it's dirty title there's dirt on the title can I clean it off well you can try to clean it off and if you can clean it off then that would be good what are some reasons for an unclear title there are many reasons why an unclear title might not show up in a title search it could be the property is old and the heirs to the property never properly filed the deed upon their inheritance during a marital separation a jointly owned home can cause a problem if two people are listed on the deed in cases of fraud a title may show up as unclear as well