If a friend or family member passes away and leaves something to you in their will, this matter will be handled during what’s known as the probate process. Probate is the court-supervised legal proceeding that validates a deceased person’s will. During the probate process, assets are divided, debts are settled and any other aspects of a person’s will are executed. Because probate legally distributes assets and works to settle outstanding debts, many people assume that the probate process clears a property’s title. But is that actually true?
In today’s blog, we talk more about what probate does and doesn’t do and if it functions as a type of title search during the process of property division.
Will Probate Clear My Title?
While probate can help to clear up some issues that could serve to cloud a title, there is no guarantee that probate will ensure that you receive a clear title associated with a property. During probate, some very simple checks will be made. Research may be conducted to see if there are outstanding property tax liens associated with the property or if any federal or state-level environmental fines or liens have been levied against the property, but these rudimentary checks will in no way cover any and all potential threats to a property’s title.
Perhaps you inherited property from your father, who unbeknownst to you was having some work performed on the property. Payments to contractors stalled after he fell sick, and a mechanic’s lien was put in place for unpaid contractor services. The existence of this lien may not be discovered during the probate process unless the contractor or the company pushes for payment upon learning of the property owner’s death. Some liens may be discovered, but many potential title issues may not be revealed because while probate helps to establish legal transfer of ownership, it does not automatically clear up title issues. Liens do not die with the original owner, they remain connected to the property and the land, so if you become the new owner, you also inherit these unresolved issues.
Because of this, it’s imperative that you take two crucial steps after inheriting property. The first is to bring a title service team aboard to investigate and clear a title. You may assume that there are no title issues because you’re simply inheriting the property, but that doesn’t mean that issues didn’t exist with the property prior to your inheritance. Clearing a title brings peace of mind knowing that it’s extremely unlikely anyone will ever contest your legal ownership of the property.
The second thing you should do is talk with your title service team about title insurance. Title insurance is a one-time fee that provides you with coverage in the event a prior title defect surfaces during your ownership of the property. Your title service team will work to clear all title issues, but it’s impossible to know with 100 percent certainty that every single issue has been resolved. In these instances, title insurance can provide you with that complete certainty.
If you’ve inherited the property, you may be in luck. If the person you inherited the property from had a title insurance policy in place, that coverage may extend to you as the heir. Title insurance does not remain in place when a property is sold or even gifted to someone else, but it can continue offering protection when an owner dies and the property is willed to an heir. Your title service team can explain if you already have coverage because it had been secured by the previous owner, or if a cheap, one-time fee is worth it for a lifetime of coverage.
Know that probate will not act like a standard title search, and never assume that the process will clear a title. Bring a title service team like Commercial Partners aboard if you inherit property to ensure no hidden issues unexpectedly become your problem as the new owner.
For more information, or for help with any other aspect of commercial acquisition, reach out to the team at Commercial Partners today at (612) 337-2470.