Selling a Florida Property With a Cloudy Title

A “cloud on title” is anything in the public record, or sometimes outside it, that raises doubt about who owns a property or what claims are attached to it. It doesn’t always mean something is wrong with your ownership. It means a title company isn’t willing to insure the title, and a buyer’s lender won’t lend, until the issue is resolved. Many title problems are fixable. The key is finding them early, before a buyer’s closing date is on the calendar.

How title problems usually come to light

When a property goes under contract, the title company or closing attorney orders a title search. They review the recorded deeds, mortgages, liens, judgments and court records tied to the property and the owners. Then they issue a title commitment listing what must be fixed or cleared before they’ll insure the sale.

If you suspect an issue, you don’t have to wait for a contract. You can review recorded documents yourself through the Lake County Clerk of Court’s official records search, or ask a title company to run a search before you list.

Common causes of a cloudy title

Unreleased mortgages. A loan was paid off years ago, but the lender never recorded a satisfaction. This is common and often fixable by getting the lender, or its successor, to record a satisfaction.

Liens. Judgment liens, tax liens, code enforcement liens, and HOA liens can all attach to real property. They usually need to be paid, settled, or shown not to apply to this owner before closing.

Construction liens. Contractors and suppliers who weren’t paid can record a claim of lien. Under Fla. Stat. 713.22, a construction lien generally doesn’t continue more than one year after recording unless the lienor files an action to enforce it within that time. The statute also lets an owner record a notice of contest that shortens the time the lienor has to sue to 60 days after service. Your attorney can tell you whether that’s the right step.

Heirs and estates. When an owner dies, the property doesn’t automatically transfer just because the family agrees on who should get it. Until the estate is handled through probate or another legal process, the title may not be insurable. Our probate selling guide covers this.

Divorce. A former spouse may still be on the deed, or a divorce judgment may have addressed the property without a deed being recorded to match.

Deed errors. Misspelled names, wrong legal descriptions, missing witnesses, or defective notary acknowledgments on an older deed.

Boundary and survey problems. Encroaching fences, buildings, or driveways, or a legal description that doesn’t match the survey.

Missing or unknown owners. Older family land sometimes passed down without anyone handling the estates along the way, leaving several generations of potential heirs.

Common ways title gets cleared

The fix depends on the problem. Some are handled by a title company in a few phone calls; others need an attorney and a court.

Satisfactions and releases. Getting the lender or lienholder to record a satisfaction or release.
Payoffs at closing. Many liens are simply paid out of the seller’s proceeds at closing.
Corrective deeds. A new deed from the original parties to fix an error in an earlier one.
Affidavits. Title companies sometimes accept sworn affidavits on certain issues, such as continuous possession or the identity of a person with a similar name to a judgment debtor.
Probate or a related proceeding. To establish who inherited the property and give someone authority to sign.
Quiet title action. A lawsuit asking the court to determine ownership and remove adverse claims. Florida’s quiet title statute is Fla. Stat. 65.061. This is usually the slowest route and is used when other fixes aren’t available.

Florida’s Marketable Record Title Act, Chapter 712, can also cut off certain older claims for someone with a 30-year chain of record title, subject to the exceptions in the statute. Whether it helps in a particular case is a question for a title attorney.

Foreclosure is different

If a mortgage is in default and a foreclosure has been filed, the issue is more than a title cloud. The sale has to pay off the loan, or the lender has to agree to a short sale. Talk with an attorney and your lender early, because deadlines in a foreclosure case move quickly.

Can you sell before title is cleared?

Sometimes. You can list and accept an offer while the fix is underway, but you should be upfront with the buyer, set a realistic closing date, and make sure the contract gives enough time. Some cash buyers or investors may be willing to buy with a known issue at a lower price. That’s a choice worth comparing against the cost and time of clearing it yourself.

Questions to ask before you list

Do I have a copy of my deed and my owner’s title insurance policy?
Have all my mortgages been satisfied of record?
Is everyone who’s on the deed alive and available to sign?
Has anyone recorded a lien against me or the property?
Does the fence line or the survey match the legal description?
If I inherited the property, was the estate formally handled?

We can help you sort it out

Title problems are stressful, but most of them are puzzles with a known solution. At RLW Realty we work with local title companies and real estate attorneys and can help you figure out what you’re dealing with before you list. Call our Umatilla office and we’ll help you take the first step.

This guide is general information, not legal or tax advice.