Title Issues
Things to know:
• Live clients are the only people who can legally sign listing and sales agreements.
• Listing agreements need to be signed by all individuals who are the vested on the property.
“Red Flag” to watch for:
The situations that can become “tricky” are the situations in which a person, who is deceased, is still on title.
Dealing with these kinds of situations can take time and is not something that can be resolved at the closing
table.
How to avoid some of the issues:
• If the vested owners are holding title as “joint tenants” and one of them is deceased, an original or certified
copy of the death certificate must be obtained. The death certificate is recorded and the surviving owner(s) sign
the vesting deed and other closing documents.
• If the vested owners’ are holding title as “tenants in common” and one or more of the owners’ is deceased, the
property must go through probate to release the deceased party’s ownership, which could take months.
• If title is held in a trust and one of the trustees is deceased, a copy of the trust is required for review. The trust
will establish who the successor trustee(s) is. The successor trustee(s) can sign the vesting deeds and all other
closing documents.
COMPETENCY/CAPACITY
Things to know:
• A person must be deemed competent and capable to secure the validity of a legal document.
• A person must also be over the age of 18 to hold a vested interest in property.
Competency or capacity is defined as:
Having the mental ability to understand the nature and effects of one’s acts, and the ability, knowledge, legal qualifications, or fitness to discharge the required duty or professional obligation created by the act. The most common reasons for incompetency and incapacity are: minor children (under the age of 18 years old), permanent mental condition (Alzheimer, acute mental illness) and temporary mental condition (under influence of mind altering medications, drugs or alcohol).
“Red Flags” to watch for:
• Determining whether a person, especially an adult, is competent can be a difficult task.
• Children under the age of 18 can not legally hold title to property. In some situations, parents will vest property
in their children’s names (mainly as a tax shelter) not knowing the repercussions of this action.
• If a person is found incompetent or incapacitated and they have signed a legal document, such as a real estate
purchase contract, it will void that document.
How to avoid some of the issues:
• Use your best judgment. If an individual does not seem competent, talk with the real estate professional prior to
closing about your concerns. If possible, a second or third opinion may be helpful from an outside source
(doctor, family members, notary). The courts can certify whether a person is incapacitated.
• In the event that an individual may become incompetent, it is a good idea to have the person sign a power of
attorney giving someone else the right to sign for them.
• If a minor child is vested on property, the courts would need to appoint a conservator to sign any and all
contracts on behalf of the minor (this could take time).
Title Tips Courtesy of First American Title Insurance Agency
• Live clients are the only people who can legally sign listing and sales agreements.
• Listing agreements need to be signed by all individuals who are the vested on the property.
“Red Flag” to watch for:
The situations that can become “tricky” are the situations in which a person, who is deceased, is still on title.
Dealing with these kinds of situations can take time and is not something that can be resolved at the closing
table.
How to avoid some of the issues:
• If the vested owners are holding title as “joint tenants” and one of them is deceased, an original or certified
copy of the death certificate must be obtained. The death certificate is recorded and the surviving owner(s) sign
the vesting deed and other closing documents.
• If the vested owners’ are holding title as “tenants in common” and one or more of the owners’ is deceased, the
property must go through probate to release the deceased party’s ownership, which could take months.
• If title is held in a trust and one of the trustees is deceased, a copy of the trust is required for review. The trust
will establish who the successor trustee(s) is. The successor trustee(s) can sign the vesting deeds and all other
closing documents.
COMPETENCY/CAPACITY
Things to know:
• A person must be deemed competent and capable to secure the validity of a legal document.
• A person must also be over the age of 18 to hold a vested interest in property.
Competency or capacity is defined as:
Having the mental ability to understand the nature and effects of one’s acts, and the ability, knowledge, legal qualifications, or fitness to discharge the required duty or professional obligation created by the act. The most common reasons for incompetency and incapacity are: minor children (under the age of 18 years old), permanent mental condition (Alzheimer, acute mental illness) and temporary mental condition (under influence of mind altering medications, drugs or alcohol).
“Red Flags” to watch for:
• Determining whether a person, especially an adult, is competent can be a difficult task.
• Children under the age of 18 can not legally hold title to property. In some situations, parents will vest property
in their children’s names (mainly as a tax shelter) not knowing the repercussions of this action.
• If a person is found incompetent or incapacitated and they have signed a legal document, such as a real estate
purchase contract, it will void that document.
How to avoid some of the issues:
• Use your best judgment. If an individual does not seem competent, talk with the real estate professional prior to
closing about your concerns. If possible, a second or third opinion may be helpful from an outside source
(doctor, family members, notary). The courts can certify whether a person is incapacitated.
• In the event that an individual may become incompetent, it is a good idea to have the person sign a power of
attorney giving someone else the right to sign for them.
• If a minor child is vested on property, the courts would need to appoint a conservator to sign any and all
contracts on behalf of the minor (this could take time).
Title Tips Courtesy of First American Title Insurance Agency
posted by Real Estate 101 | 11:41 AM
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