Selling or buying a home in Little Rock is not always a straightforward process. Sometimes the title search brings up a cloud on the title that must be resolved before the property can be sold. The way to resolve a cloud on a title is to file a quiet title action.
What is a cloud on a title?
A title may have a claim or “cloud” on it in a variety of ways. The common factor, however, is that another person or entity has an adverse ownership interest in the property.
For example, if the mortgage was not paid or taxes were not paid, the bank or Internal Revenue Service (IRS) may have a claim to the property. This means that they have an ownership interest in the property. Other clouds on a title can be found if there is a boundary dispute between neighbors or if there were typos in the title to the property.
How does a quiet title action work?
In a quiet title action, the seller will challenge the party with a claim to the property in court. The point is to identify the correct owner of the property for legal purposes and to clear up any ambiguities in the title, thus allowing the seller to move forward with the sales process.
Once the quiet title action is satisfied, the seller has full rights to dispose of the property and can no longer face adverse interests from any other people or entities who may claim they have a right to the property.
Note that the buyer of the property does not have the same protections as the seller of the property following a quiet title action. The only way the buyer can sue the seller of the property based on ownership claims by an outside party is if the buyer purchased the property through a warranty deed.
Property owners generally want to resolve any clouds on the title quickly and cost-effectively. Quiet title actions can take a few months to resolve in some situations, but with the right help sellers can clear up clouds on a title allowing for the sale of the property to move forward.