A quiet title action is a lawsuit started to settle a dispute as to ownership in real property. In Michigan, quiet title actions are authorized by law. The goal of the suit is to cure problems in the chain of title and to have a court determine the precise ownership of real estate. Sometimes a quiet title suit can be “friendly” against other parties and sometimes it can be quiet contentious depending on the situation.
Quiet title actions are common when a property owner wants to retain possession or ensure that title is marketable for future sale. For instance, a real estate investor will want to ensure the title to the property they are purchasing will remain theirs after the closing.
Reasons to Start a Quiet Title Action
There are many reasons someone might need to bring a quiet title suit. The following are common examples. The goal is almost always the same: clear defects in title and obtain marketable title.
Quiet Title for Liens
Liens can be recorded on a property under various statutes depending on the situation. These include judgment liens, property tax liens, constructions liens, and child support liens, just to name a few. However, once the lien is satisfied (essentially, paid) or otherwise becomes invalid they should be removed. Often liens are forgotten about and the party responsible for removing the lien does not take action. In these cases, a quiet title action is necessary to remove the lien from the chain of title.
Quiet Title for Forged Deeds
A forged deed does not convey title in Michigan, even if the purchaser is innocent. Forging a deed is also a crime, yet many unscrupulous individuals will attempt to sell property they do not own. A quiet title claim will remove a fake deed from the chain of title so that the true owner can demonstrate their proper ownership.
Quiet Title for Quitclaim Deeds
A quitclaim deed only conveys the interests the grantor had to the grantee. The grantor of a quitclaim deed does not warrant title nor do they make any claim that the property is free of encumbrances (such as a mortgage). If the grantor had no interest to begin with, then the grantee may have none as well! This should give a purchaser cause for concern. Thus, when a quitclaim deed is used in a real estate transaction, a quiet title action may be necessary to remove doubt over ownership.
Quiet Title for Adverse Possession
A quiet title action is useful for someone claiming to adversely possess a property or a party seeking to defeat such a claim. In Michigan, adverse possession occurs when claimant possesses a property in way that is visible, actual, open, exclusive, notorious, hostile, continuous, and uninterrupted for 15 years. A person who claims ownership by adverse possession will have title once these elements are met. However, they do not then automatically receive a deed they can then file in the register of deeds. A quiet title action would need to be brought to permit the adverse possessor to file the proper deed.
Conversely, an owner of a property may seek to file a quiet title action to prevent an adverse possessor from claiming title before it is too late.
Breaks in the Chain of Title
A break in the chain of title occurs when the last recorded owner claiming title to the property cannot trace back ownership with other previous record holders in the register of deeds. For instance, a property may have been transferred to a trust, but the trustee never recorded the deed. In these instances, the beneficiaries of the trust or the heirs of the decedent’s estate will need to be identified in the quiet title suit to sort out ownership.
Mortgage foreclosure sale
Most mortgage foreclosures are performed by advertisement (as opposed to the alternative judicial foreclosure process). Mortgage foreclosure by advertisement is a legal means by which the mortgagee can sell the property after the mortgage is in default. The law is clear that title vests after the sale, but Michigan case law permits a few limited challenges to this process. A challenge to a mortgage foreclosure sale could include fraud or some other highly problematic irregularity in the foreclosure. Someone who has purchased a property from a mortgage foreclosure sale may want to file a quiet title action to ensure that it also forecloses the previous owner from coming back to claim ownership.
Tax foreclosure sale
A property sold at a tax foreclosure sale is rather safe from a later challenge under Michigan law. This is because Michigan law mandates that absolute title vest in the governmental unit when it takes the property for unpaid back taxes. However, the tax sale can be challenged from a due process perspective. If a claimant can show they did not receive adequate notice of the sale, they could allege the sale is invalid. A quiet title action should be initiated to avoid claims from a former owner.
The Importance of Title Insurance to Clear Title
As a final note, it’s clear that title defects can be a real pain. Title insurance can often be useful in helping clear issues that may arise. If you are purchasing a property, carefully review your title commitment to ensure what it covers. Sometimes the exclusions are the most significant portion of the policy. If a title issue later comes up, the insurer should help assist with cleaning up the issue with a quiet title action or other appropriate legal measures.