Color of Title
a title to a property that is invalid.
Color of Title Details
If you are unfortunate enough to find yourself in possession of color of title, it means that any property you thought you had legally, you actually do not. For one reason or another, the title you hold is defective, even though it seems legitimate at first glance. “Title” in this case is a legal term. You do not physically hold a title—you physically hold a deed.
Rendering a title defective doesn’t mean that there has to be some scandal associated with the original deed. It can be as basic as a missing clause in the written documents, or the specifications of the deed do not comply with the area’s real estate and land ownership laws. Other ways you can come to have a color of title are:
- You inherit someone else’s defective deed.
- When two people purchase property but receive two separate deeds.
- If the deed is forged or executed incorrectly.
- Adverse possession.
In some cases, you can make a color of title valid through a process called adverse possession. Adverse possession is when someone who does not legally own a piece of property comes to own it. When you file adverse possession under a color of title claim, the process is typically more expedient and more favorable for you.
Example of Color of Title
Mary’s father, who had just started investing in property, passed away from a long-term illness. His most recent purchase was 2 acres of unoccupied land next to his house. Before he passed, he wrote that his daughter Mary should inherit the deed to the property in his will. Unfortunately, because he was new to property investment, he overlooked a crucial component in the deed’s paperwork. It does not specify a grantor. This makes the title to the land a color of title.
Of course, Mary wants the land her father left her but didn’t know that the title is invalid. Over the next ten years, she starts to clear the acreage and maintain it regularly. New neighbors move in on the other side of the acreage start construction on a new fence. This begins a dispute between Mary and the neighbors. In an attempt to show proof that she owns the land, she actually finds out that the deed to the land is void.
To fix the invalid title, she goes to a real estate attorney for advice. The real estate attorney files a color of title claim at the Bureau of Land Management. This is Mary’s right under The Color-of-Title Act. Because she has probable evidence (the deed) that she has rights to that land, she may very well be able to own the property legally through adverse possession.
Significance of Color of Title
Though it is not the correct way to go about property ownership, having a color of title is “better than nothing” in adverse possession claims. It shows that you made an effort to obtain the land legally. The invalid deed will also be probable evidence that you have a claim to the land in question. If you do have a color of title, it’s better to sort it out sooner rather than later, as it can impede your ability to sell.