This Week's Question

March 20, 2006

By Nena Groskind

Q:   In 1976, my parents purchased a 29-acre lot in north central Massachusetts from an old former neighbor who gave them a quitclaim deed. They received an offer on the property about 20 years ago, but the title search revealed a problem that killed that deal. It turned out that the neighbor who sold them the property actually held title to only 6/10 of the land; the remaining 4/10 was owned by siblings of the seller’s mother who had inherited their share via a 1930 inheritance. When my parents informed the seller of the problem, he told them that 3 of the 4 siblings involved had died and the fourth had said she would give him her share if he paid the taxes on the property, which he had done. That aborted sale occurred almost 25 years ago and my parents made no further efforts to sell after that. But now they are quite elderly, retired, and living on a fixed income. The need to sell has become more urgent. The neighbor who sold them the property, the neighbor’s wife and the sibling who gave him her share all are deceased. Under the circumstances, is there any way for my parents to obtain marketable title?

A:   This isn’t just a title problem; it also suggests the plot for a television series, a cross between “Survivor” and “Who Wants to Be A Millionaire.” But I’ll stick to the title issues, which are quite complicated, according to the title experts I consulted.

As they explained it, although the bottom tier of owners in the title chain are deceased, their children, close relatives, or others in a position to inherit their interests may still be living, and may be able to assert a valid claim. That will be a major concern for a title company weighing whether to issue the title insurance policy that would give your parents the marketable title they need to sell the property. A title company will consider several factors, among them:

Generally speaking, the longer the history of the title chain, the fewer living heirs involved, and the smaller the size of possible claims, the more comfortable a title company is likely to be with issuing a policy that would defend the owners against and pay to settle any future claims. In this case, most of those factors work against your parents. Seventy years is not very long in a title chain, there could be any number of potential heirs involved who may not be all that easy to locate, but who probably would demand a hefty price as consideration for eliminating the cloud on the property’s title. And we’re not talking about a tiny sliver of this parcel – we’re talking about fully 40 percent of it. If there is a claim, it won’t be a small one.

Title companies also have to be concerned about what they call “title pirates.” These are professionals who find missing heirs, obtain their interest in properties like this one, and then assert a claim that the owner, or the owner’s title insurance company, must settle. Because the risks here are extensive, insuring against future claims may be something of a stretch for most title companies. But you should at least explore that possibility with one or more companies. There may be details you haven’t mentioned that would improve the insurance picture. Just make sure you specify that you want an owner’s policy; most title companies wouldn’t have a problem issuing a lender’s policy, but that will only cover the lender’s interest; it won’t cover your cost of fighting a title claim, nor will it pay for any judgment against you.

If you can’t obtain title insurance, there is another way to sell the property, although I’m not sure how appealing it will be. You can bring a “partition” action, essentially subjecting the sale to the supervision of a court. The court would authorize the deed, but you would have to set aside the appropriate portion of the sale proceeds (in this case, 40 percent) to satisfy potential claims. This would allow your parents to sell the property, but it would tie up a large chunk of the sale proceeds until you either find the other owners or satisfy the court that it is impossible to do so. That could take quite a long time.