Affidavit of Title (Free Forms & Overview)

An Affidavit of Title is a legal written document that proves a seller owns a given property and has the right to sell it to another person. Formally,

The Affidavit of title is usually a sworn statement of fact that declares the property’s seller holds the title to it and attests that certain other facts relating to the specific property are true and are duly notarized. A seller usually prepares an Affidavit of Title. This document is sometimes referred to as a General Title Affidavit or Seller’s Affidavit.

For example,

If one is looking to sell their real estate property, one would need to provide an affidavit of title indicating that he/she is the true owner of the property, that the given property is not being concurrently sold to another buyer, that there are no liens or unpaid taxes against the property, and that the seller is not in bankruptcy proceedings.

Affidavit of Title- An Overview

The key purpose of the Affidavit of Title is to protect a property’s buyer from any outstanding legal issues that might be facing the seller of the given property. Suppose an issue arises in the future after the transaction has been completed. Then the buyer has proof of a written document -with sworn statements by the seller that can be used in legal proceedings.

The most common circumstances for using an affidavit of title are whenbuying or selling a property.

The property sold or bought may include:

• A piece of land without buildings on it
• A home including a town home or condominium
• Houses
• Cabins
• Cottages or vacation properties, etc.

Tip: Generally, the Affidavit of Title does not differentiate between these types of properties.In most states, including the United States, the Affidavit of Title is part of the legal paperwork required to sell a property. Generally, the document will also be required by the title company before issuing title insurance to a buyer.

Importance of Affidavit of Title

An Affidavit of title contains a sworn statement where the seller of property declares that they hold the property’s title under oath. The document also attests that specific other facts about the property are correct- as sworn to by the seller and duly notarized. An Affidavit of title is important due to the following reasons:

It is proof of ownership

Ideally, the legal owner of a property is the only person that can sell the property in question. However, with few exceptions, this is not always the case. The Affidavit of title provides a confirmation of ownership which gives the buyer some level of certainty that the seller is both the valid owner of the property and that there are no other individuals claiming ownership of the given property.

 It confirms that the seller is not currently in bankruptcy proceedings

When someone is facing bankruptcy proceedings, there are no limits to what he/she can do to their property. During the proceedings, a trustee decides whether the property can be sold and under what conditions. To sell the property, the owner must get permission from the trustee. An affidavit of title serves as confirmation that the seller can make important decisions, such as selling the property in question independently.

Confirmation that the seller is not concurrently selling the property to anyone else

According to state laws, it is illegal to sell the same piece of property to more than one buyer. This is considered fraud. Nevertheless, such cases happen and frequently, for that matter. For this reason, assurances are now required in an Affidavit of Title. This document serves as confirmation to the buyer that they are the only one buying the title to the property.

It offers protection from unpredictable legal issues

An affidavit of title is essential. It offers the buyer protection from any legal issues and affirms that the property’s seller has no pending legal issues, such as tax evasion, property liens, and any other illegal activities that may be transferred to the buyer in the future.

What is a Lien

A lien is a permissible claim against a property owner by a creditor (s) that allows the creditor to collect what he/she is owed. Generally, a lien can be established by a legal judgement or by a creditor, and it serves to guarantee an underlying obligation such as repayment of a debt. If the underlying obligation is not fulfilled, the creditor can seize the assets that are subject to liens and recover their money.

Presence of liens

If there is the presence of liens to a property, the lien won’t prevent the sale of the property, but it will determine who gets the money from the sale and in what order. Typically, the buyer’s attorney or title company ensures that the liens are paid off, and the title is cleared before transferring ownership of the title to the buyer.

Absence of property liens

In a situation where a property is free of liens, this implies that there is no one with a financial interest in the property other than the owner. This is an assurance to the purchaser that the seller is free to sell their property to any person of their choice, with no obligation to others whatsoever.

Types of property liens

Property liens can be categorized into voluntary liens- where one agrees to give a lender some property to serve as collateral or involuntary or non-consensual liens- where the creditor obtains the lien involuntarily. However, all these categories come into play once the property owner fails to pay an obligation, in most cases, a debt. Below are some of  the most common types of property liens:

Mechanic’s lien

Several states have some type of mechanic lien statute. A mechanic lien applies when someone hires a contractor to work on their property and fails to pay for the work done. In most cases, the contractor must record the lien within one to six months of not being paid.

While some states provide some definition of the type of work in which a mechanic’s lien is allowed, other states don’t. The state statutes also provide procedures to enforce a mechanic’s lien and the procedure for the property owner to contest the lien if there was a problem with the quality of work produced or if it was not done.

Mortgage lien

A mortgage lien applies when a homeowner takes out a mortgage on the specific property, and the mortgage company places the lien on the property to serve as collateral for the amount of mortgage owed.

Homeowners association (HOA) liens

This type of lien applies when a person lives in a homeowner association and fails to pay the dues over time. If this happens, the HOA has the power, based on the association’s bylaws, to place a lien on the property to recover their money. This type of lien may progress to foreclosure. However, this is usually rare, and it is considered a last resort because the association would have to pay the property taxes.

Federal tax lien

A federal tax lien is a government’s legal claim against a property owner for neglecting or failing to pay a tax debt. This type of lien protects the government’s interest in an owner’s property including, personal property, financial assets, and real estate. Usually, a property federal tax lien takes priority over all other types of property liens, meaning that if the given property is sold, it should be paid first, regardless of the time it was imposed.

State tax lien

State governments and Federals have laws that grant taxing authorities liens on an individual’s property to secure unpaid taxes. The prerequisites for converting an unpaid unsecured tax obligation into a tax lien are outlined in the statute that creates the lien rights and can vary depending on the state in question. Usually, liens for unpaid real estate taxes attach only to the property for which the tax was owed.

Municipal lien

A municipal lien is a lien imposed by a municipal corporation against a property owner for the owner’s proportional share of a public improvement that fundamentally benefits the owner. This type of property lien is placed against real estate for liabilities incurred by the property owner that has since been unpaid. Municipal liens are meant to threaten the investor’s right to foreclosure or add the expense to the real estate’s disposition process.

Contents of an Affidavit of Title Form

The basic guidelines for drafting an affidavit of title vary from state to state. As such, there is no standard format for drafting the legal document. However, when drafting a typical affidavit of title, consider including the following essential contents:

Affirmation of facts

Firstly, the document must include some language declaring that the signer is swearing or affirming the facts listed in the Affidavit of title form.

Seller’s identification

An affidavit of title must establish that the seller is the property’s true owner and has the legal right to transfer ownership of the property’s title. The seller’s distinguishable and identifiable information should be provided in the document, including the name and addresses of the seller.

Previous names of the seller

A list of the previous names the owner might have gone by within the past 10 years before signing the Affidavit must be provided. If there are any names in particular that you as the seller might have gone by previously, it is essential that you include them in the Affidavit of title.

Statement of absence of liens

The Affidavit of title form must also state that the property is not subject to liens, including mechanic’s liens, municipal liens, state tax liens, condominium owners, and federal tax liens, or any other judgement liens.

Details of liens

Alternatively, if any property liens are imposed on the specific property you are selling, make sure to identify them in the Affidavit of title form and include as many details as possible.

No bankruptcy proceedings affirmation

In the Affidavit of title, the seller must establish the salability of the property by confirming that he/she is not currently facing any bankruptcy proceedings meaning that he/she is actually taking part in the decision of selling the given property and not the trustee. Therefore, the form must include this confirmation statement.

Exclusions

There can be specific exclusions provided in the Affidavit of title forms, such as easements, encroachments, and other issues that may not be readily available on public records. Easement on a property means that there is another person other than the seller with a right to use the property. If there are any easements or encroachments, detail them in the Affidavit of title and indicate that they will be paid off after closing.

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Consequences of Not Having an Affidavit of Title

An affidavit of title is specifically meant to protect the purchaser from any underlying legal issues facing the seller of the property in question. Therefore, without the document, the buyer is unprotected from such unfortunate issues, which could impact their legitimate ownership of the property in the future.

The following are the expected consequences of purchasing property without an Affidavit of Title:

• Without an Affidavit of title, the purchaser of a given property is at risk of contending with unpredicted legal issues, including boundary line disputes, judgments against the given property, or the seller may be subject to a power of attorney due to mental health problems and issues.

• Buying a property without the seller signing an Affidavit of title may also render the buyer legally responsible for various property liens. Common examples of liens imposed on a property may include; Homeowners Association liens, federal tax lien, mechanic’s lien, mortgage liens, and any other forms of government liens.

• Failing to have the seller sign an Affidavit of title before purchasing a property may make the buyer victim of fraud or render them vulnerable to fraudulent activities. The most common forms of property fraud include; the impersonation of the valid owner of the property in question, sellers presenting buyers with forged deeds, an unrevealed lease agreement of the property to another buyer, property being subject to bankruptcy proceedings, or undisclosed co-owners of the property.

• Purchasers should be highly alert to any seller that is reluctant to provide an affidavit of title during the exchange of ownership of the property. Despite offering money to the seller in exchange for the property title, the buyer might be held legally responsible for any unprecedented legal issues that may be facing the owner if one does not have the Affidavit of title.

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