We just found out that our land and home is someone else's property

[cartay493]

Kentucky

What are we supposed to do? We just found out that the lot and house we bought 10.5 years ago were quit claim deeded to the builder (that we bought it from) by a neighbor who didn't own the property! - Furthermore, the neighbor is aware and admitted that he did it, by mistake of course. The real land owners, 2 of them, both live out of state. One has been contacted by another neighbor that proposed buying the property, that owner does not want to sell. - We now know that we are living right in the middle of a development right-of-way that the owners/developers wanted to keep. What should we do?

 

[justalayman]

did you obtain a warranty deed from anybody? Did you purchase title insurance?

 

[cartay493]

I don't know what a warranty deed is and I'm not sure if we have or had title insurance. We bought the lot and house from a builder and our first mortgage was through our bank. It has been surveyed three times in the past 11 years, and refinanced two more times through two different mortgage companies. To make things even more complicated, in 2001 we and a different neighbor traded some land which we have the deed to as well.

 

[justalayman]

I can't tell you if you were granted ownership by warranty deed or not. You should have the deed used to transfer the property to you as well that should be recorded at the register of deeds (or whatever your state calls the office where deeds are recorded).

If you have a warrant deed, you have recourse against the grantor of the deed.

You also need to research to determine if you have title insurance. If you do, you need to contact your title insurance company asap.

 

[cartay493]

Yes. I have the original deed and I see that it says "with CONVENANT of GENERAL WARRANTY". Is this what you were asking? This deed names us, the builder/seller, and our neighbor whom he acquired the land from (which was not his to quit claim deed to the builder). How do we protect our investment?

 

[justalayman]

I was doing good until the neighbors name got included.

who is listed as grantor(s) and who is listed as grantee(s)?



btw: the claim via claiming under a warranty deed is the hard way to do this. If you have title insurance, it will be easier to make a claim through them (given it is a covered situation). So, keep looking for that title insurance policy as well.

If you look in your closing documents, you may be able to find an itemization of the debits and credits. If so, if you purchased title insurance, there is a good possibility it will be listed there. If so, hopefully there is a company name and you can contact them for a copy of your policy.

 

[cartay493]

Sorry for the confusion. The deed does not use the terminology "grantor" or "grantee". - The deed refers to the builder as parties of the first part and us/the buyer as parties of the second part. The deed actually names the neighbors this way " Being the same property that _______ and __________(the builder and his wife), acquired title by deed dated the 10th day of August, 2000, from _______ and __________ (neighbors that quit claimed deeded the property that wasn't theirs) which deed is recorded in Deed Book _____, page _____ in the Clerk's officed of the __________County Court." -And YES! We paid for title insurance!!!! It's listed on the settlement statement as Title Insurance to ______ (local law firm) $227.50 (in the paid from Borrower's Funds at Settlement Column!!! ---- NOW what do I do?

 

[justalayman]

Ok, that (with the inclusion of the neighbors names) makes some sense. I don't see a need to include it as such but it makes sense anyway.

Tomorrow, call the title insurance company and try to calmly convey the situation to them. That is the first, and only thing (for the moment) I would do. Depending on what you hear from them (it won't be an instant answer), you would determine what your next step is.

Is the builder still around the area?

Do have a relationship with a lawyer that deals with real estate? If not, you might start researching to find one you would hire if needed.

 

[cartay493]

Yes. The builder/seller is still around my area. No, I don't have an attorney, nor do I even know where to start looking. And I think that I must not have made myself clear earlier......I don't think the builder is at fault here, even though he is involved. The "neighbor" is the one that is at fault for quit claim deeding property that wasn't his to the builder. Am I right?

 

[justalayman]

I understand your point about the builder not being at fault BUT.


a quit claim deed does not necessarily convey title to property. It transfers whatever interest the grantor has to the grantee. In your case, that appears not be none. As such, there is no recourse against that neighbor.

Now, a warranty deed does something much more.

here is definition:

“General Warranty Deed”
Glossary

Definition: A general warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to you. The guarantee is not limited to the time the grantor owned the property—it extends back to the property's origins.
Important portions of a general warranty deed include,

The grantor states there are no hidden liens or encumbrances on the property. In other words, there are no debts or holds other than those that are obvious in public records.

the grantor declares that he or she is the owner of the property and has a right to sell it to you.

The grantor guarantees that if the title ever fails he or she will compensate the grantee (new owner) for any losses.

that last part can be very important. Since title insurance is so common, there aren't typically a lot of claims against a grantor using a warranty deed but none the less, using a warranty deed does mean something. If you have no other recourse, this gives you something.

a warranty deed should not be given without knowing you have the right to grant exactly what you are. If you do not have the right to grant all rights to the property, then yes, it is your fault and you should be held liable for the losses the grantee has. That's how the system works.

 

[cartay493]

First of all I want to take the time to thank you for your time and advice. I didn't even know where to start looking for answers**************... And secondly, I just found another problem. A copy of the deed of conveyance between the neighbor and the builder was in my first settlement papers. It does not state that it was a quit claim deed. Does this change anything? I don't know if it makes any difference or not. We thought it was a quit claim because the neighbor came by and discussed this with my husband and told him he didn't know how this happened, that he had quit claimed this property by mistake. - Wow! I REALLY need a lawyer!!!! What would happen if the true property owners came back and saw us living here? Thsi is terrible? Can they make us leave? Canw e lose our investment?

 

[nextwife]

This is exactly why one NEVER buys real estate, not even from their own mother, without title insurance.

 

[cartay493]

Thank you for your reply, but if you read the entire posting, you'll find that we DO have title insurance.

 

[justalayman]

First of all I want to take the time to thank you for your time and advice. I didn't even know where to start looking for answers**************... And secondly, I just found another problem. A copy of the deed of conveyance between the neighbor and the builder was in my first settlement papers. It does not state that it was a quit claim deed. Does this change anything? I don't know if it makes any difference or not. We thought it was a quit claim because the neighbor came by and discussed this with my husband and told him he didn't know how this happened, that he had quit claimed this property by mistake. - Wow! I REALLY need a lawyer!!!! What would happen if the true property owners came back and saw us living here? Thsi is terrible? Can they make us leave? Canw e lose our investment?

If the neighbor used a warranty deed doesn't really change a lot as far as you are concerned. It may mean something regarding the builder.

if the true owners came back: they could take action to ask a court to order you to move. It can be a difficult (and expensive) situation. That is where your title insurance comes into play though.

Right now, while I understand it is overwhelming, nothing is going to happen overnight. Just start tomorrow and contact your title insurance company and see where that takes you. This is not likely to be a real fast process.

 

[LdiJ]

Thank you for your reply, but if you read the entire posting, you'll find that we DO have title insurance.

Get yourself a real estate attorney to handle this.