Legal Definitions - title standards

Title standards are a set of established guidelines or criteria used by legal professionals, such as real estate attorneys and title examiners, to evaluate the legal soundness of a property's ownership history. These standards help determine if a property's title is "marketable"—meaning it is free from significant defects or encumbrances that could prevent its clear transfer to a new owner—or if it is "defective," indicating potential problems that need to be resolved before a sale can proceed smoothly. Essentially, they provide a common benchmark for assessing the quality and reliability of a property's ownership records.

• Example 1: Unreleased Mortgage Lien

  A couple is selling their home, and during the title search, it's discovered that a mortgage from a previous owner, which was paid off 25 years ago, was never formally released from the public records. The state's title standards specify that any unreleased mortgage, regardless of age, must be formally discharged or proven satisfied to ensure a clear title.

  Explanation: In this scenario, the unreleased mortgage would be considered a defect according to the title standards. Even though the debt was likely paid, the standards require official documentation of its release to make the title marketable. The seller would need to work with the title company to obtain a formal release or take other legal steps to clear this old encumbrance before the sale can close.

• Example 2: Discrepancy in Property Description

  A developer is purchasing a large tract of rural land for a new housing project. A review of the historical deeds reveals a minor discrepancy in the legal description of a boundary line between an old deed from 1950 and the most recent survey. The state's title standards require that all legal descriptions in the chain of title be consistent and accurate to ensure clear boundaries.

  Explanation: The inconsistency in the property description would be flagged as a potential defect under the applicable title standards. Even a minor error could lead to future boundary disputes. The standards would require the developer or seller to resolve this, perhaps through a corrective deed or a boundary line agreement, to ensure the title accurately reflects the property being conveyed and is therefore marketable.

• Example 3: Missing Probate Records for Inherited Property

  A family is selling a vacation cabin that was inherited from their grandmother. During the title examination, it's found that while the grandmother's will was probated, the specific court order transferring the cabin to the current sellers was never properly recorded in the county land records, as required by state law and local title standards for inherited property.

  Explanation: The absence of the properly recorded probate document showing the transfer of ownership to the current sellers would make the title defective according to the title standards. These standards ensure that there is a clear, unbroken chain of ownership documented in public records. The sellers would need to obtain and record the necessary probate documents to demonstrate their legal ownership and make the title marketable for sale.