What is a cloud on title?

If you have had any experience buying or selling a home or property in Tennessee, you may have heard the term "cloud on title". The term is common, but if you aren't a real estate attorney, you may not know what it means or how it can affect your interest in the property.

A cloud on title is a defect or error in the title history of a property that affects the owner's interest and rights. Usually, cloud on title comes from unreleased liens, claims, probate issues, or foreclosures.  Some examples include:

• A lien or judgment against a previous owner that has not been paid or released;

• A missing or incorrect deed or document in the chain of title;

• A claim or dispute by a third party over the ownership or use of the property (like adverse possession); or

• A mistake or fraud in the recording or transfer of the title.

As you can probably guess, there being a cloud on title can create problems for all parties to a transaction - the buyer, lender, insurer and seller of the property. It can prevent or delay the sale or refinancing of the property, reduce its value, and expose the owner to legal challenges and lawsuits.

To clear a cloud on title, the owner of the property may need to file a quiet title action to obtain a court order to resolve any issues with the chain of ownership to the land.

What does "quiet title" mean in Tennessee?

The term "quiet title" generally refers to the process of resolving any cloud on the title real property, in order to ensure the property has a clear title. A quiet title action is a lawsuit that asks the court to declare the owner's title as valid and free from any defects or claims. The defendants in a quiet title action could be known claimants, such as individuals or corporations who have formally made a claim to a property, or unknown claimants, which are common in quiet title lawsuits filed after tax sales.

Why would a property owner file a quiet title suit?

There are different reasons why a property owner might file a quiet title action. By far, the most common reason is to settle an ownership dispute and provide the property owner with clear title. However, quiet title actions can sometimes be necessary if a technical error or defect is discovered in a transaction. Either way, given the legal issues that can come up during a quiet title suit, it is always advisable to get help and assistance from an experienced attorney.

Quiet title to fix a technical title defect.

Sometimes everyone in a real estate transaction agrees who the legal owner of a piece of property is, but there are errors in the title records. Sometimes these errors are missing documents, improper conveyancing, or the chain of title doesn't match the parties' expectations.

A quiet title action can cure these defects and ensure that the chain of title is accurate and reflects the true ownership of the real property. In these cases, the quiet title action is usually straightforward because none of the interested parties dispute the property ownership.

Quiet title to settle an ownership dispute.

Another common use for quiet title actions is to settle a dispute over the true ownership of the property. Sometimes, after a real estate transaction has been completed, the new owner will discover that another party has claimed an interest in the same property. This could happen for a number of reasons, such as an inheritance that was never properly recorded, or after a tax sale (rare).

In these cases, the quiet title action is necessary for the new owner to establish a perfect legal claim to the property. However, these cases are also usually more expensive and time consuming, due to the need for extensive hearings and discovery.

How long does it take to quiet title?

The process of filing a quiet title action can vary depending on the type and complexity of the cloud on title, and whether the case is contested or not. Generally, the process begins by identifying any potential issues regarding the title to the property. Many times, a title company or title insurance carrier will identify an issue with a property when a buyer and seller send a contract to a title agency to handle the transaction, and the agency (or its attorney) conducts a title search.

Once the issue is identified, the owner of the property (not the buyer) must determine whether there is a way to resolve the issue by agreement - for instance, having a claimant execute a quitclaim deed or buying out a potential claimant's interest. If no agreement is feasible, then the owner must file their quiet title action in the Chancery Court in the county where the property is located.

Once the petition is filed, defendants have 30 days to file an answer, after which the case may either continue with discover, hearings, and eventually a trial, or it could end relatively quickly, with a default judgment.

If there are unknown defendants, the action to quiet title must be served by a process known as publication. In Tennessee, service by publication is a way of trying to give notice of a lawsuit to parties when they cannot be served personally (read "handed the documents"). In short, the court clerk will prepare an order that is published in a newspaper for four consecutive weeks.

Either way, there will be at least 30 days of waiting after the petition is filed, and then time after that for the actual legal proceedings. Generally speaking, 6 to 12 months is a good expectation to have.

How much does a suit to quiet title cost?

Like the time frame, the cost of a quiet title action varies depending on the circumstances of the case. If there is no dispute, the major costs will be legal fees and court costs, which could range anywhere from $2,000 to $5,000 per property.

If the quiet title action is disputed, there is no "ceiling" to the potential costs, as it will depend on how much time is spent completing prelitigation and litigation tasks, such as discovery, depositions, pre-trial hearings, etc. As with any litigation, the total expense can be unpredictable, and it is best to contact an experienced attorney to review your specific circumstances.

Get Help with Your Quiet Title Action

We hope you found our article on quiet title actions in Tennessee informative and helpful. Understanding the need for quiet title actions, their effect on property ownership, as well as the associated costs and time frames is crucial for anyone facing issues with their property title. At Otten Law, PLLC, we are dedicated to assisting clients with their real estate needs, providing expert guidance and legal representation. If you have any further questions or require legal assistance, please do not hesitate to reach out to us. Our team is ready to help you navigate the complexities of quiet title actions and ensure a favorable resolution.