Having the title to your home means that your name is on the deed. “Tangled Title” refers back to the scenario while you stay in a home you own (or have a proper to own) however your call isn’t at the deed.
Most often, titles get tangled the person whose call is at the deed passes away and the loved ones hold to stay withinside the domestic without placing the deed of their call. At that point, the surviving loved ones have a tangled identify due to the fact they inherited an interest in the home, however, their call isn’t at the deed.
Mary and James have lived with Mary’s mother, Nancy, a widow, for the past five years. Nancy told the couple that they would inherit her home once she passed. Mary and James pay utilities and take care of upkeep on the home. Nancy has had sole ownership of the home ever since her husband Harold died.
Fast forward four years, Nancy has just died, and Mary and James continue to live in the family home. They recently visited their neighborhood bank to see if they qualified for a home equity loan to make improvements on the home. They were surprised to find that the home’s title was still in Nancy’s name. The deed had never been transferred, and, technically, Mary and James do not own the home.
Mary and James counted on using the equity in the home to provide much-needed heating and air conditioning improvements and to upgrade the main bathroom. They are expecting their second child and need a more functional layout for their growing family.
Mary and James make an appointment with their attorney to learn how they can untangle their home’s tangled title. They are unhappy to hear that they must incur this added expense, but they really have no choice. They need the home and its equity to help support their family.
How Does a Title Get Tangled?
A deed is a legal document that is used to transfer ownership of a property from one person to the next. The person who holds the title to a property is the legal owner of that property. When you purchase a home, a deed transfers the home’s title from the current owner to you. A deed would be used to transfer ownership of Nancy’s home to Mary and James.
The terms title and deed are commonly confused. A deed is an official written document. A title refers to who owns a property. It is a concept, not a legal document.
When Nancy died, she stated in her Last Will and Testament that she was passing ownership of her home to Mary and James. The couple assumed they owned the home until they learned differently at their bank meeting. An inherited interest is not enough. Nancy forgot to put Mary and James’s names on the deed, and therefore, the property does not legally belong to them.
The Pew Charitable Trusts investigated the problem of tangled titles in Philadelphia. Approximately 2% of the city’s 509,258 properties have tangled titles. These properties have a value of over $11.1 billion. Unfortunately, tangled titles may go on for years, and most people do not realize they have an issue until they financially need the equity in their home and cannot access it.
What Are the Potential Consequences of a Tangled Title?
Mary and James do not legally own the home they are living in, a situation known as a tangled title. Potential consequences of having a tangled title include:
- Not having access to your home’s equity
- An increased risk that the home deed may be stolen
- An inability to sell the property or transfer it to your heir or spouse
- Inability to use your home equity to qualify for financial assistance to make upgrades or repairs
- An inability to negotiate with a mortgage company or assert a tax payment plan, which can put you at increased risk for foreclosure
- Difficulty getting homeowner’s insurance
How Can You Untangle a Tangled Title?
In Mary and James’s case, untangling the title is fairly straightforward. Nancy was the sole owner of the home, and she stated in her Last Will and Testament that she wanted the property to go to the couple. Nancy’s home and property are scheduled to go through probate in the next month or so. At the end of probate, a new deed will be drafted and recorded, naming Mary and James as the owners of the home. This process would have been more difficult if Nancy had not expressed her wishes in her Will, if there were multiple heirs with an ownership claim, intrafamily conflicts, or shared ownership of the property.
Probate can take a year or more, and there are fees involved, such as administrative costs and attorney’s fees. In addition, untangling a title can get complicated, and therefore, the expertise of a probate lawyer may be necessary. The Pew Charitable Trusts estimates that the cost of untangling a title at $9,200 for a home valued at $88,800.
Contact us for assistance if you need help to untangle your property’s title. It is best to address the problem as soon as you know it. An estate planning attorney can also help you ensure that your property is passed to your loved ones in the manner you intend and that they will not be faced with untangling a tangled title.