Titling and Deeds
Titling and deeds in Illinois are a central part of real estate transfers and transactions of residential and commercial property. It is critical to make sure you understand what they are, how they differ, and the roles they play with regard to ownership rights. Being informed is your best way to make smart real estate decisions and avoid challenges to your property interests.
At Liberty Law, real estate attorney David Liberty in DuPage County understands the challenges and complexities of titles and deeds. Let us answer your questions by calling 630-449-4800 or filling out our online contact form to schedule a free consultation.
Titling and Deeds in Illinois Real Estate
While holding title and a deed to property may seem like the same thing, they are actually two different legal concepts.
Titles are the concept that you have ownership rights to a specific property. How you take title matters when there is more than one person taking title because it impacts your rights when you want to sell it or transfer it to another person if something happens to you.
Deeds are the physical evidence of who has title to what specific property, but there’s more than one type of deed. Some deeds provide warranties while others do not.
Titles Defined
When you discuss title to a property, you are referring to an individual’s right to use and own that property. When you hold title, you have legal rights and responsibilities to that property. Titles can be held by individuals, and they can be held by more than one person. For example, a married couple can both hold title to the same property. Corporations, partnerships, organizations, and trusts can also hold title to property, granting the respective parties rights of ownership and responsibility of the same property. In sum, titles are a concept and represent the legal right to use and modify the property – and that legal right can be attached to more than one person or entity.
Because more than one person or entity can hold title to the property, when a person purchases real estate, they want to conduct a title search to ensure the title is clean. A title is clean when there are no liens or encumbrances attached to it. Many parties to a real estate transaction in Illinois will purchase title insurance. This is insurance that indemnifies or protects against financial losses in cases where there are defects in the title. When a dispute regarding ownership and title arise, a quiet title action is performed.
Deeds Defined
A deed is a physical legal instrument that records the sale or transfer of property. It must be executed pursuant to the laws of the jurisdiction of where the property is located. A deed is executed by the grantor who is selling or transferring the property to the grantee who is buying or receiving the property. The deed provides evidence of who has title to the property.
When the grantor transfers property during a real estate transaction, they can transfer it using one of three types of deeds:
- General warranty deed
- Special warranty
- Quitclaim deed
Each deed type represents the extent or knowledge of title to any specific property.
Three Common Ways to Take Title in Illinois
You take title when you acquire real estate either by a transfer or sale. If you will share title, your rights and responsibilities per that title depend in large part on how the title was taken. Three ways to take title are described below.
1. Tenants in Common
Tenants in common mean more than one owner exists, and each has an undivided interest in the property. That undivided interest, however, does not need to be equal. One owner can have 25% interest while the other has 75% interest. Each owner can convey or gift their interest in the property without the consent of the other owner. When an owner dies, their heirs take title to the decedent’s portion of the property.
Generally, unmarried people take title of property this way.
2. Joint Tenants with the Right of Survivorship
Joint tenants with the right of survivorship mean more than one owner exists, and each has an undivided and equal interest in the property. When one owner dies, their share automatically goes to the other owner. Because it is automatic, probate is avoided.
Generally, unmarried people take title of property this way, but it typically involves unmarried couples or family members.
3. Tenants by Entirety
Tenants by entirety is ownership available only to married couples. It acts the same way as joint tenants with the right of survivorship, i.e., when one spouse dies, the decedent’s interest automatically goes to the surviving spouse. Aside from not going to probate, there is another benefit. The surviving spouse’s interest in the property is protected from the decedent spouse’s creditors.
Understanding Quiet Title in Illinois
Whenever there is a dispute as to who owns a piece of property, and whether or not there is anyone else with a claim on the property, a quiet title action can clarify ownership.
Problems that may be addressed in a quiet title action include technical defects and questions of ownership.
A Technical Defect With Title
When real property is bought and sold, there is a title search performed which summarizes the information available on the public record about the property. How far back these searches must go varies by jurisdiction, but it is not uncommon for them to go back 20 years.
Information on a title search includes:
- Property taxes
- Mortgages
- Liens
- Easements
If there is a problem with the title, it should be discovered in a title search. Issues are sometimes found in these searches that make the title technically deficient, although no one is challenging ownership.
For example, let’s say a developer is buying a large tract of land currently owned by a person whose family has had ownership of the property for many years. At some point in the chain of title, the legal description of a deed did not include part of the tract. Subsequent deeds did include the deleted tract. No one disputes that the deletion was an error, but the developer wants to ensure there are no problems in the future. A quiet title action is likely the best route to take.
These types of quiet title actions are usually not challenged and are settled quickly.
A Dispute Regarding Property Ownership
When an action is filed to quiet title, the complaint will name any and all parties that could possibly claim an ownership right to the property. This is necessary so they can be put on notice of the action. If they feel that they have an ownership interest, they can assert that interest or be forever barred from doing so.
For example, let’s take the same scenario as before, but instead of there being a problem with the legal description, the problem is that at one point eight siblings inherited the property from their parents, but only seven signed the deed conveying the property to the next owner in the chain of title. Many years have passed, but the developer wants to make certain no one can later claim that they are part owner of the property. A quiet title action should be able to resolve this issue, but it may be challenged by the eighth child.
Understanding the Different Types of Deeds in Illinois
A deed transfers real property from a grantor to the grantee. There are three main types of deeds: the general warranty deed, the special warranty deed, and the quitclaim deed.
General Warranty Deeds
When a grantor signs a general warranty deed, they make broad promises, or covenants, regarding the title of the land to the grantee. The grantor agrees to protect and defend the grantee should any other person or entity later claim to have an interest in the property. This type of deed is most preferred by grantees simply because it offers the greatest protection.
Special Warranty Deeds
In a special warranty deed, a grantor offers limited protection to the grantee. The grantor is stating that since they have had the property, they have neither negatively affected the property nor created a defect on the title. This deed does not offer a buyer as much protection as the warranty deed does. Special warranty deeds are common to transfer bank-owned or foreclosed properties.
Quitclaim Deeds
With a quitclaim deed, the grantor is saying that they are transferring to the grantee any interest they currently have in the property. They make no guarantees or promises regarding the quality of the title, so if there is a lien against the property, it will remain with the quitclaim deed. Because there are no guarantees, this type of deed is rarely used when money is exchanged but is most often used when the grantor and grantee know each other. For example, parents may want to add their children to the deed. In this case, they may want to change the way they took title from Tenants by Entirety to Joint Tenants.
Contact a Real Estate Attorney in DuPage County Today
Having a property law attorney on your side will ensure your transaction goes smoothly, disputes are avoided, and the transaction complies with all related laws. It will also ensure you take title in the manner that best suits you and that the appropriate deed is timely recorded. Contact Liberty Law today by either calling 630-449-4800 or filling out an online contact form to schedule your free consultation. We are here to help.
