Property titles are a necessary part of ownership. They’re legal documents used to track ownership and are created by the jurisdiction (city, state, or county) where the property is located.
When property is sold or transferred, specific steps are required to assign the title to the new owner. Understanding legal requirements for property title transfers in Minnesota is crucial to a successful property sale.
Minnesota’s system has had parallel title documentation processes for more than 100 years, which can lead to some confusion. A real estate attorney with experience can help untangle any issues arising from title searches and encumbrances.
What Do Titles to Real Property Do?
Real property titles name the owner(s) and describes the location and features of the property. The person named on the title to property has the right to sell or transfer it as long as there are no encumbrances or issues.
There are several types of titles, which describe forms of property ownership. These include:
- Sole ownership: one person with complete control over a property.
- Joint tenancy: two or more people sharing equal ownership with automatic survivorship transfer.
- Tenancy in common: two or more owners without survivorship benefits and self-described percentages of ownership.
- Community property: dual ownership through marriage in community property states.
- Condominium ownership: sole ownership of a unit and shared ownership of common spaces within a development.
- Cooperative ownership: shareholder in the owning company that includes rights to occupy a unit.
Types of Title Documents in Minnesota
There are two systems of title documentation in Minnesota, abstracts and Torrens. Transferring from one system to another has been a voluntary process. Abstracts are more often found in rural areas rather than cities and are more likely to have complications due to recording lapses by owners. Liens and other encumbrances on title abstracts are sometimes not recorded, so it’s harder to track them down and resolve them before selling the property. Knowledge of Minnesota real estate title law is critical to sorting out title issues before a sale.
Abstract: this is the history of the property title contained in paper document form (usually bound in a notebook). If pieces of the property have been divided and sold, the deeds to those portions are included in the abstract. When a property is sold, the abstract of title must be provided to the buyer.
Torrens: this title document is court-generated and government-registered. It is favored in densely populated areas with complex ownership histories. The process of creating a Torrens title costs money due to court fees but minimizes the likelihood of unknown liens. Transfers require only the Torrens title number, no document.
Common Title Issues in Minnesota property sales
The reason that title searches are part of property transfers is that it’s common to find unresolved title issues. If an issue is not removed from the title, it can pass to the new owner. Common title issues include:
- Unresolved liens. These can be mechanic’s liens from renovation work done on the property or loans that used the property for collateral. Spouses involved in a divorce may also place a lien on the property to prevent unauthorized sales.
- Recording errors. When a property is transferred and a new title created, the officials responsible for the paperwork may introduce an error such as the wrong street address, missing an easement, using the wrong coordinates for boundaries, or a mistake in the property description.
- Boundary and easement issues. Neighbors often dispute boundary lines, which can blur over time. Similarly, easements provided to utilities or other uses can change the property title. These issues should be corrected before transferring ownership.
- Bankruptcy. If a title holder is in bankruptcy their ownership stake in property may be held by the bankruptcy trustee, complicating transfer.
How a Real Estate Attorney Can Resolve Title Issues in Minnesota
When selling property, several important tasks must be completed. Knowing the ins and outs of these steps and staying on top of necessary deadlines is challenging for an individual yet a normal part of a real estate attorney’s work.
Don’t let an unforeseen lien trip up the sale of your property. Contact the Waypoint Law team to ensure a smooth closing and title transfer.