Buying and selling real property is an exciting and daunting prospect for many people. Whether it is raw land, a first home, or commercial real estate, transactions for real property can often face numerous obstacles. There can be issues with financing, the property itself or even getting marketable title. These issues can arise on the side of both the buyer and the seller. Some of them can be quite simple to resolve and some you may need the help of an experienced real estate lawyer.
In this article, I will discuss a specific problem relating to obtaining marketable title. Marketable title is important for many reasons but for most people it’s important because they want to be able to sell or refinance their home or property. The most common method of financing property in Arizona is for the buyer to sign a promissory note that is secured by a deed of trust in favor of the person who is lending the money for the purchase. This could be the seller but often times it is a bank or other lender. In addition to purchasing the property, the buyer also wants to know that the property is free from any other defects in the title. One example of this would be if a prior owner borrowed money to finance the property, but the lender never released the deed of trust. This causes a problem because the buyer does not want to purchase property that someone else may have a claim to. So, what happens if a seller discovers a problem such as this when trying to sell or refinance their property?
One way to deal with this is to file a quiet title lawsuit. The subject of a quiet title lawsuit could be an entire blog in itself. Quite title lawsuits can be filed for many different reasons, for purposes of this article it can generally be defined as a seller asking the court to give them a marketable title. One requirement of a quiet title lawsuit however, is that the seller must give notice to the party that has the deed of trust. That is usually not a problem if that is a large company like a bank, but it can be complicated if it is an individual. It can be even more complicated if that individual has passed away. This is a very specific problem, but not as uncommon as it may seem on first impression. It was so common in fact, that Arizona enacted a statute to specifically address this.
Arizona Revised Statute §33-711 states that “An heir or legatee of a deceased person, residing within or without the state, upon recording in the office of the county recorder sufficient proof of his ownership of a mortgage or deed of trust may, in the same manner as a personal representative of a deceased mortgagee or owner of the indebtedness secured by a mortgage or deed of trust, release such instruments by recording a release of mortgage or deed of trust”. What this means is that, in the situation above, the seller can get the deed of trust released without having to file a costly quiet title lawsuit or probate for the decedent. Although this is a very specific case, it can be tremendously effective in saving the seller both time and money in obtaining marketable title to their property.
As stated, this statute applies to a specific situation and this article is by no means meant to cover everything. If you have become aware of a defect in your title, it’s always best to have an experience real estate lawyer examine your case and advise you of your options. As stated above, a simple consultation could save you a tremendous amount of time and money. Platt & Westby, P.C. has offices in Phoenix, Arrowhead, Litchfield Park, Scottsdale and Mesa Arizona. Contact our office by calling 602-277-4441 or visit plattwestby.com to schedule a consultation with one of our experienced attorneys.
Written by: Kent Millward 8-16-2017