Do you really know who is on the deed to your house?
“Well of course I do! …don’t I…?”
You might, or you might not. In my time as a real estate attorney I have come across more than one situation where clients did not know how, or if, they held title to their property. A real estate attorney can look at your deed and/or chain of title and tell you how you hold the property, what the implications are, and help you change how you hold title to your property, if another method of ownership would better suit your needs. Here are a few examples of situations that I have seen with some facts changed and all names omitted to protect client confidentiality:
The Trust: This client came to me for Estate Planning purposes. She asked me to look at her Will and her Deed to be sure of how her property would pass to her children. She had multiple grown children with varied personalities who did not all get along and wanted to be sure that the property would not end up the subject of arguments amongst them after her passing. Her and her late husband had transferred the property into a Trust of which two of the children were co-Trustees requiring both together to make all decisions on distribution of property under the Trust. The Trust pre-dated the family feuding and the two co-Trustees got along the least well of the children. I was able to advise her to amend her Trust and help her think about the best ways to do so to suit her needs, before it became problem.
The Widow: As often happens in real estate transaction, I did not get introduced to this client until she was already under contract to sell her home. Her husband had passed years before and her lifestyle had changed such that she wanted to move out of the large family home and into something smaller and closer to her children and grandchildren. Her and her late husband had owned the property for many years, and she assumed that it was all in her name when he passed away. I obtained the Deed to her house from the land records and discovered that the house was only in her late husband’s name. In that situation, she had no title to the property, as the property was in the husband’s estate and would need to be transferred using the process of the Probate Court. The buyers under the Purchase and Sale Contract did not want to wait for the probate process, so they terminated the contract and she was left to start over again looking for a buyer.
The LLC: I represented the buyer in this transaction. The property was held by a small Limited Liability Company (LLC), which is not uncommon and, in and of itself, does not raise a red flag. As I customarily do, I searched the Secretary of State’s database for the state where the LLC held itself to have been currently registered. That State had no record of the LLC. I searched the Secretary of State database for the State where the LLC was registered when it took title to the subject property and discovered that it had dissolved. During dissolution the LLC had not disposed of the subject property, so it still sat in the non-existent LLC. When an LLC has dissolved it does not legally exist and cannot transfer any assets, therefore it could not transfer good title to my client. The Seller and the Sellers’ attorney had to reinstate the LLC in the original State of registration to be able to transfer the property.
If you are thinking of selling your real property, or would like to arrange your assets to plan your Estate, an attorney can take a look at how your hold title to the property to help you avoid future issues.