An affidavit of title is created by a seller and designed to protect the buyer of some property.
It is a commonly used legal document in real estate purchase agreement transactions and other property transactions where ownership is transferred.
What is an Affidavit of Title?
An affidavit of title is a document created by a seller assigned to protect the buyer of some property. The property may be a home, including a townhome or condominium.
It could be a cottage or vacation property. It might be a piece of land with no buildings on it. An affidavit of title does not distinguish between these types of property.
In the affidavit, the buyer makes several statements under oath.
These statements include:
- Confirmation the seller is, in fact, the owner of the property in question;
- Guarantee the seller is not currently in bankruptcy proceedings;
- The seller is not also selling the property to another person; and
- A detailed list of any liens on the property or a representation of no liens.
Why Are These Confirmations and Details Important?
Confirmation of Ownership
Only the property owner can sell the property in question with few exceptions. Confirmation of ownership provides the purchaser with assurances that the seller is the valid owner and that they are the only property owner.
Confirmation the Seller is Not Currently in Bankruptcy Proceedings
When someone is in bankruptcy proceedings, there are limits on what they can do with their possessions, including property. During bankruptcy, another person called a trustee, decides whether a property can be sold and under what conditions it can be sold.
The property owner must get permission from the trustee to sell the property. Consequently, an Affidavit of Title assures the purchaser that the owner is in a position to make decisions, such as selling the property.
The Seller is Not Selling the Property to Another
Selling the same piece of property to more than one person is illegal. Nonetheless, it has been done often enough that assurances are required in an Affidavit of Title.
This assures the purchaser they are the only one giving money to the seller in exchange for title to the property.
What is a lien, and what types exist?
The Presence of Property Liens
A “lien” is a claim a creditor has either acquired or been granted by the property owner. A lien won’t prevent a property sale – it just dictates who gets the money from the sale and in what order.
A title company or attorney should measure whether the liens are paid off and the title is cleared before passing the title to you.
The Absence of Property Liens
If a property is free of liens, no one has a financial interest in the property other than the holder. This assures the purchaser the property owner is free to sell the property to anyone they choose, without obligation to others.
4 Types of Property Liens
1. Mortgage Liens
There are several different ways a lien might be placed on the property. For example, when a homeowner takes out a mortgage on the property, the mortgage company places a lien on the property for the mortgage amount.
2. Homeowner’s Association Lien
If you own a condominium and fail to pay your homeowners association (HOA) dues, your HOA will take action.
Depending on your association’s bylaws, they may be able to place a homeowners’ association lien on your property for the amount owed.
3. Mechanic’s Lien
Imagine you hire a contractor to perform work on your home and then don’t pay the contractor, who then sues you for payment.
If they win a judgment against you, they can place a mechanic’s lien on your property until you pay the amount owed.
4. Federal Tax Lien
Finally, the government can put a federal tax lien on your property. If you fail to pay your federal income taxes, The government’s national tax lien always takes priority in the order of delivering the liens.
In other words, if a property has a federal tax lien of $25,000 and a mechanics lien of $25,000, and the house is sold for $30,000, the federal tax lien is paid first and in full. The mechanic’s lien is paid to the extent there are funds left over to do so.
An Affidavit of Title is sometimes called a General Title Affidavit or a Seller’s Affidavit. The affidavit may contain additional information about the property.
When Do I Need One?
If You Wish to Buy Property
If you are planning to purchase property, an affidavit of title provides proof of several essential things, including:
Proof of Ownership
An affidavit of title provides evidence that the owner is, in fact, the owner. Being sold property by a fraudulent non-owner is a typical real estate scam.
Proof of Sellability
An affidavit of title also provides you with information about whether or not the property can be sold.
For example, if the seller is currently in bankruptcy proceedings, they must get approval from a trustee before selling the home, which can take a significant amount of time.
Additionally, the affidavit will confirm that the seller is not in the process of selling the property to someone else.
Affidavits of title can also include other information, such as:
- If there are any easements on the property; or
- If there are any boundary disputes.
In summary, an affidavit of title provides security to a purchaser should there be a subsequent challenge to the title.
If You Wish to Sell Property
If you are the property owner, an affidavit can provide assurances to the purchaser, which were outlined above. These assurances include that you are who you say you are and are free to sell the property at your discretion.
Whether you are buying or selling property, creating an affidavit of title takes little effort. It can protect buyers and sellers, so there is no reason not to execute one.
What are the Consequences of Not Having One?
Without an affidavit of title, the purchaser is unprotected from several unfortunate scenarios that could impact their legitimate claim on the property. Some consequences of purchasing property without an affidavit include:
Contending with Unexpected Legal Issues
- Judgments against the property;
- Boundary line disputes; or
- Seller subject to power of attorney due to failing mind.
Becoming Responsible for Liens
- Property subject to HOA liens;
- Property subject to mechanic’s liens; or
- Property subject to federal tax or other government liens.
Becoming a Victim of Fraud
- An undisclosed lease of the property to another;·
- Undisclosed co-owners of the property;
- Forged deeds;
- Impersonation of the valid owner of the land; or
- Property subject to bankruptcy proceedings.
There are many consequences of not having an affidavit of title, and none are favorable to the purchaser.
If the purchaser buys the property without knowing, for example, there is an assessment on the property for new sidewalks and curbs; this does not excuse the new homeowner from responsibility for paying for the evaluation.
If the home is the subject of an HOA lien, the HOA may have a claim to the property, despite the fact you gave the seller money in exchange for the title to the property.
Any seller reluctant to provide an affidavit of title should be viewed with extreme caution.
Does Title Insurance help to negate those consequences?
Title insurance is insurance you purchase from a title company and protects purchasers from financial losses if there is a lawsuit attacking the title.
It also protects new owners from monetary losses due to unknown restrictions on the title, such as a lease, easement, or city lien for street maintenance.
Title insurance is a low-cost way to protect yourself and your property from surprises.
The Most Common Situations for Using an Affidavit of Title
The most common situation for using an affidavit of title is when someone is buying or selling property, such as:
- Land;
- Land with outbuildings; or
- A home, including:
- Townhomes;
- Condominiums;
- Houses; and
- Cabins or Cottages.
While an affidavit of title is a good idea for any property sale, title companies offering title insurance require them. Because title companies need them, most mortgage lenders will also require title affidavits.
What Should an Affidavit Include?
An affidavit of title first includes some language that declares the signer is swearing or affirming the facts listed. It then consists of the following information:
- Identifies the seller as the owner of the property;
- Lists the previous names the owner may have gone by in the ten years prior to the signing of the affidavit;
- States there are not any liens, including:
- federal tax liens;
- state tax liens;
- municipal liens;
- mechanics liens; or
- other judgments.
- In the alternative, identifies and details the liens that exist;
- If there are easements on the property, these should be detailed; and
- Affirms there are no bankruptcy proceedings.
Frequently Asked Questions
I have a bankruptcy on my record. I don’t think that is anyone else’s business. What happens if I leave it off my affidavit of title?
Do not misrepresent any facts in your affidavit of title. In this document, you affirm the truth and integrity of your statements. Under oath, Misrepresentation, at best, could be construed as fraud.
I want to buy a property, but the owner refuses to sign an affidavit of title. Should I be concerned?
If a person refuses to sign an affidavit of title, several things should concern you. A partial list of potential concerns is below:
- The person doesn’t own the property;
- The person owns the property with another person who doesn’t want to sell or doesn’t know about the proposed sale;
- There are liens on the property; or
- The person is not authorized to sell the property for some other reason.
I checked my title, and it lists a mechanics lien on my property for work my contractor did last summer. After they put the mechanic’s lien on my property, I paid what I owed them. How do I get this lien off the title?
If you have completed the payment, your property should not have a lien. Obtain the proof you have paid the bill and send it, along with a letter, to the lienholder.
Ask them to remove the lien. This is probably just an oversight on the contractor’s part. However, if they refuse to lift the lien, you may have to file a lawsuit to “quiet title.”
I have checked my title, and my property has a lien. I didn’t pay child support for a while, and the government put a lien on my house. How do I get rid of the lien?
First, you have to pay the amount owed. Next, ask the court to release the lien.
How does a lienholder release a lien?
A lienholder releases a lien by filing a form called a Release of Lien on Real Property, notarizing it, and recording the document at the county recorder’s office.
I paid cash for a property. Now I have discovered there is a mechanics lien on the property. Shouldn’t the old owner keep responsibility for the lien?
Liens stay with the property, not the person who owned the property. Consequently, the mechanic’s lien is now your responsibility.
