QUIET TITLE: A USEFUL TOOL IN RESOLVING PROPERTY TITLE ISSUES
The act of Quieting Title on property is intended to produce clear and marketable title. If a property’s title is not clear and marketable it likely has a title defect, also known as a “cloud.” Title defects are called clouds because the defect may obscure the property’s true owner or reflect that a party has an interest in property when it actually does not.
Clouds on title include deeds that break an otherwise clear chain of conveyances or an unreleased mortgage that secures a loan that was actually paid off.
Clouds on title are often discovered when property is being sold. Sellers almost always have a contractual obligation to transfer clear title to the buyer. As a result, the seller obtains a title insurance company to search the property’s title history. If a cloud on title appears, it may need to be resolved with an action to Quiet Title.
The seller, often through an attorney, files a Complaint to Quiet Title in the Illinois Judicial Circuit where the property is located. The Complaint explains the cloud on title and why it should be removed. The court then determines whether or not the cloud is a legitimate claim on the property. If the cloud is not legitimate, the court issues an order removing the cloud from the property’s title history.
For example, you attempt to refinance the current loan that you used to buy your property. The new loan will be secured by a new mortgage. But before your lender provides the new loan, it uses a title insurance company to check your property’s title. Although unlikely, it is possible that the lender’s title insurance company finds an old mortgage recorded against your property that was given by a previous owner.
A Complaint to Quiet Title would allege that the loan secured by the old mortgage was actually paid off. As a result, the holder of the old mortgage should have released it from your property’s record. The old mortgage is still of record by mistake.
In this case, the court hearing your Quiet Title action is highly likely to order the old mortgage released from your property’s title history.
Having a good attorney can help further understand how to Quiet Title and whether it is necessary to resolve any clouds on your property’s title.