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Passage of Title in Illinois

By Tabitha Naylor

Passage of title is the transfer of the legal rights over real property or real estate from one person to another. In the case of a real estate transaction that transfer occurs between the owners of the property (sellers) and the buyers.

Why is Title Transfer or Passage of Title Important?

The sale of your property isn't legal unless the title is cleared and transferred to the new owners. As a buyer, without possession of legal title over your property, the law won't recognize you as the legal owner of the property.

What does it mean to Clear Title?

A clear title means that there are no legal errors in the history of the title, no recording mistakes, or any other parties that have an interest in the property, such as a bank who is owed a debt on the property, an ex-spouse, a named heir in a will, tax authorities, or other lien holders. In order for a title to be successfully transferred the title must be clear.

Are There Ways to Prevent Title Problems?

The title process can be a bit unnerving but there are things you can do to eliminate or minimize any potential problems related to the title of your property. One of the most common ways to protect a title is to buy title insurance. Although title insurance can be expensive, if there is anything that makes you suspect a problem may exist with the title it could be money well spent. Most mortgage lenders require title insurance to protect their loan. For buyers this is a good thing because the title insurance from a title insurance agency covers you against incompetent representation, erroneous description of the property, fraud and many other contingencies.

Another good step to prevent problems is to hire an experienced real estate lawyer. Together with the lawyer you can go through the history of the property, the ways in which title has been passed down, details about the property itself and identify any potential issues or instances where previous transaction representatives may have been negligent. That may lead you to purchase title insurance. Insurance benefits are paid only to the "named insured" in the title policy, so it is important that an owner purchase an "owner's title policy".

Holding Title in Co-Ownership Situations

In Illinois the most basic form of title is as "tenants in common". If no manner of title is stated, it is presumed co-ownership to be as tenants in common. Owners of property as tenants in common own an undivided fractional interest in property. What that means is that although the co-owners may own unequal shares of property, the owners may still each use the entire property. The physical property is not divided. Tenants in common each hold separate ownership interests which can be sold, conveyed or transferred without the consent of the other owners. When one of the owner's dies, that share of land is transferred by the owner's will or by the intestacy statute and the owner's heirs or legatees become the new owners of that share. Land that is held as "tenants in common" may also be "partitioned" or encumbered by creditors.

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