Ownership of real estate is transferred using a deed. There are different kinds of deeds.
There a different types of ownership of real estate. A married couple would want to own a home as joint tenants. This form or ownership means that when one person passes away, the survivor automatically becomes the sole owner. However, a brother and sister might want to own real estate as co-tenants. This means they have the power to leave their 1/2 ownership to their side of the family.
Deeds are incredibly important. You should have a professional prepare any kind of deed for you. There are numerous ways to mess up a deed and you probably would not know it by looking.
Real Estate Contracts
Buying a house that is owner financed is buying a house on a real estate contract. A seller and buyer should always use an escrow company. It protects the seller because the escrow company keeps track of all payments. It protects the buyer because when they make the last payment, the escrow company hands them the deed to the house; they don't have to ask the seller to give them one because the escrow company has been holding the deed all along for them.
The danger to the buyer is that if they get behind on the payments, and if they are defaulted, they lose their investment and get kicked out in 60 days or so.
When a non-professional messes up a deed, it 'clouds' the title. A quiet title suit quiets the title of the land into the proper person.
We also see these kinds of suits regarding mineral interests, like oil and gas. For example, Great granddad bought mineral interests back in the 1920's. Oil company drills an oil well. The oil company will not pay royalties to the great grandchildren because there is no paper trail from great grandfather down to them. Their title to the minerals is clouded by the lack of a paper trail. So on the great grandchildren's behalf, we file a quiet title suit naming all the great grandchildren as plaintiffs and sue any unknown claimants of interest. At the end of the suit, the great grandchildren have good title to the minerals and they get their royalty checks!
Oil, Gas, and Mineral Rights
As we discussed in the quiet title section, clouded ownership of mineral rights can be corrected with a quiet title suit. Sometimes, a simple probate will fix the title. It depends on different factors, such as how many deceased persons are in the chain of title.
The paperwork on all real property, and oil and gas is real property, is incredibly picky and must be done just right. If there is a cloud on the title of the oil and gas, or if there is no paper trail of ownership, the oil company won't pay anyone because they are afraid that if they pay the wrong people, they will be sued. That is why the oil company will suspend the royalty payments until the ownership of the minerals is cleared up.
Frequently Asked Questions