Quiet Title Action: When Might You Face a Complaint?
A quiet title action describes a lawsuit over who owns a piece of property. An individual or corporation will bring the lawsuit to claim title and quiet any further claims or challenges.
Restraint on Alienation
This type of quiet title action occurs when a party wants to restrict what the deed owner can do with his or her property. This could include trying to prevent them from selling it, partitioning it, or making it law that the individual has to give the right of first refusal to the opposing party if they do choose to sell. In many cases, the amount of restraint on someone's property rights is strictly guarded (for instance, taking away all rights to sell the property would be unlikely unless there is a serious dispute to ownership), but it is something to avoid should you wish to be free to do what you want with your land.
In a quiet title action of nonpossessory interest, a party will seek a court order legalizing their right to use your property in a certain manner, even though they hold no ownership stake in the land. For instance, you have a lake on your property that has long been a popular fishing destination for residents in the community. The residents wish to continue fishing the lake and could file suit to solidify their right to do so. This is a benign example, but there have been many cases (easements) where individuals have been given rights to use a piece of land in a way that the property owner may not agree with. Protecting yourself against such an action could very well be in your best interest.
The third common form of quiet title action is the concept of adverse possession. The concept is similar in some ways to the concept of copyright protection in the U.S., where a company or individual must vigorously defend said copyright or risk voiding it. There are a number of requirements that must in place for an adverse possession claim to be validated by the court, including physical possession, open use of the land, and use to the exclusion of the owner. Much of what you can do to protect yourself against this kind of claim is to look into these requirements and ensure that you aren't allowing someone to fit them.
Investors need to do their due diligence on a property and protect themselves accordingly. The above situations are not common but investors need to be aware that these property issues exist and could potentially negatively affect their property's value.
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