Inheriting Property? Here’s How to Clear Title After Probate

If you’ve inherited real estate through probate, don’t assume you have a clean title just because the estate is closed. Title issues after probate are surprisingly common — and they can delay or prevent sales, refinances, or transfers. Here’s how heirs in Connecticut and New York can clear title and protect inherited property.

1. Why Probate Doesn’t Always Guarantee Clear Title

Even after a will is probated and an executor deed is recorded, title can still be “clouded” due to:

• Missing or disputed heirs
• Defective or unrecorded deeds
• Outstanding liens, taxes, or mortgages
• Claims from creditors or other third parties

Without resolving these issues, title companies may refuse to insure the property — making it difficult to sell or refinance.

2. Common Probate Title Disputes

Some examples include:

• The deceased owned property jointly with another party, and the estate’s share is unclear
• Heirs disagree over ownership or sale
• A long-lost heir or creditor surfaces with a claim
• The executor deed was improperly executed or recorded

3. How to Clear Title on Inherited Property

Depending on the issue, your attorney may recommend:

• Filing corrected or supplemental documents with the county clerk
• Negotiating lien releases or title insurance endorsements
• in extreme cases, a Quiet Title Action to resolve disputes or defects

Why You Need a Probate & Real Estate Attorney

These title issues fall in the gray area between estate law and real estate law. Our firm regularly works with families and title companies to resolve complicated inheritance-related title issues—fast and legally sound.

Don’t wait until closing day to find out there’s a title defect on inherited property. If you’ve gone through probate and still have questions about your title, Glouzgal Law is here to help.

Call us today to ensure your inherited home is fully yours—and fully transferable – 203-885-0500

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That’s Right; If you hire Glouzgal Law PLLC to be your real estate attorneys, we will review and advise on the following at NO CHARGE:

1. Real Estate Agency/Brokerage Exclusive Right to Represent Agreements or Listing Agreements;
2. Real Estate Agency/Brokerage Dual Agency Agreements;
3. Offer to Purchase;
4. Purchase and Sale Agreement;
5. Inspection Reports.

If you are Buyer and you engaged Glouzgal Law PLLC to represent you in your real estate purchase, you will not be charged a fee if:

1. We have reviewed documents for you but your offer is not accepted:
2. Your Offer was accepted but the deal falls apart during Attorney Contract negotiation;
3. You sign an offer or contract but you perform inspections and the condition is unsatisfactory, Seller won’t make repairs or offer compensation, so you terminate under the inspection contingency.

Further, only limited fees, assessed on a case by case situation based on work performed, will be charged if the purchase fails because the Buyer/Client cannot get a mortgage and must terminate under the mortgage/financing contingency.

If you are a Seller and you have engaged Glouzgal Law PLLC to represent you in your real estate sale, you will not be charged a fee if:

1. We have reviewed documents for you but the property never sells and you decided to de-list it;
2. You accept and Offer but the deal falls apart during Attorney Contract negotiation;
3. You sign an offer or contract but the Buyer performs an inspection, we cannot come to an agreement on a remedy for inspection items, and the Buyer terminates the purchase under the inspection contingency.

Further, only limited fees, assessed on a case by case situation based on work performed, will be charged if the sale falls apart because the buyer cannot get a mortgage and must terminate under the mortgage/financing contingency.

What are the client’s obligations?

Of course, all clients will still need to sign a Representation Agreement or Engagement Letter officially hiring Glouzgal Law PLLC to be their real estate attorney; this document will outline our services and fees. Also, while there will be no charge for our fees, any third party fees that we incur on behalf of the client will need to be paid.

WHY WOULD GLOUZGAL LAW PLLC OFFER THESE LEGAL SERVICES AT NO CHARGE?

At Glouzgal Law PLLC we want to represent our clients to the best of our ability. We want to stop problems before they occur, rather than have to work twice as hard to fix problems later. We want our clients to not worrying about having to pay us if something happens in the early stages of the real estate transaction that is not their fault. Clients that come to us days or weeks after signing agreements, offers and contracts may get bad news regarding issues that could have been avoided if we were consulted before those documents were signed. Our goal is to properly advise through the entire real estate process.

Lets be honest, whether you are buying or selling, a real estate transaction can be stressful and aggravating. We aim to alleviate some of that burden by eliminating the concerns over getting access to legal counsel.

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CHFA Mortgage Assistance for Connecticut Home Buyers

The Connecticut Housing Finance Authority, or CHFA, provides mortgage assistance programs to homebuyers in Connecticut. To receive CHFA mortgage assistance, you must be a first-time homebuyer or buying a home in a revitalization zone and qualify for CHFA assistance based on income. CHFA offers both low interest rate loans as well as down payment assistance.

CHFA mortgages can be used to purchase single family homes, condos, multi-family homes, and even some mobile homes.

The current CHFA interest rate is 3.5% for government insured mortgage loans and 3.75% for non-insured mortgage loans.

CHFA First-Time Homebuyer Mortgages

Under the CHFA, first-time homebuyers and those who have not owned a home in over three years qualify for the First-Time Homeowner program. The Buyer, or borrower, must also mee

There are also income limits as well as property value limits for CHFA mortgages. The Buyer, or borrower, must make less than a certain amount, which is $87,800 for a home of 1 to 2 people, and $100,970 for a home of three or more people. There are also some income limit differences depending on the town you are looking to purchase in. The property value limits also vary by town. The income and property value limits for specific towns are listed here: CHFA Income & Value Limits by Town.

CHFA Down Payment Assistance

As a separate service from its low interest mortgage loans for low-income households, CHFA also offers downpayment and closing cost assistance. Down Payment Assistance is offered to borrowers who can afford to pay both loans but lack the savings to make the downpayment (less than $10,000.00 total household savings).

The minimum for Down Payment Assistance loan amount is $3,000, with the maximum being the minimum downpayment amount for the actual CHFA mortgage. In most cases, the Down Payment Assistance interest rate will match the CHFA mortgage interest rate, but it can vary and could be up to 6%.

CHFA Revitalization Zones

CHFA also offers mortgage assistance for homebuyers looking to purchase homes in certain areas marked for revitalization. These are areas where the Federal Government has determined would benefit from and increase in home ownership.

In the CHFA Revitalization Zones, the first-time homebuyer requirement is suspended, 1/4% reduction in CHFA published interest rate, income limits do not apply unless also seeking downpayment assistance, and mortgage insurance may be suspended.

In Connecticut, these revitalization areas include Ansonia, Bridgeport, Danbury, Derby, East Hartford, Groton, Hartford, Manchester, Mansfield, Meriden, Middletown, New Britain, New Haven, New London, Norwalk, Norwich, Stamford, Torrington, Windham and Waterbury.

The Lender you choose can give you more information about the details, costs, benefits and downsides of a CHFA mortgage. Click for a List of Participating CHFA Lenders

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What is a real estate conveyance tax?

A real estate conveyance tax is a tax paid by the “Transferor” in a real estate transaction, typically this is a Seller. However, there are some clever Sellers that put the burden of paying the conveyance tax on the Buyer in the real estate purchase and sale contract. The conveyance tax is paid BOTH to the State of Connecticut as well as to the municipality in which the property is located. The real estate conveyance tax MUST be paid to the Town Clerk (note: not the tax collector) at the time that the Deed transferring title is recorded on the land records. You must also present a completed  and signed OP-236 – Connecticut Real Estate Conveyance Tax Return. A fillable online version is available here.

How much is the real estate conveyance tax in Connecticut?

The amount of the conveyance tax is dependent on the value of the real estate property being conveyed. In Connecticut, the real estate conveyance tax is .0075 of every dollar to the State (thts 3/4 of 1%) and .0050 of every dollar to the local municipality (that’s 1/2 of 1%).

If a home sells for $200,000.00, the Seller will have to pay $1,500.00 to the State of Connecticut, and $1,000.00 to the Town.

Are there any exceptions to the Connecticut Real Estate Conveyance Tax?

There are 22 exceptions that are noted on the back of the instructions to the return. The most commonly used are conveyances between spouses, conveyance due to foreclosure, and conveyance for little or no consideration.

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How is a Binder/Offer to Purchase Different from a Contract?

What is a Binder or Offer to Purchase? 

A real estate binder is an agreement that is commonly drafted by real estate agents. It is a document that contains all the terms of a proposed real estate transaction and usually contains the names of both parties, who their real estate agents are, who their attorneys are, the address of the subject real estate property and of the course the purchase price.

What is the Purpose of a Real Estate Binder?

A binder serves two main functions: to outline the basic terms of the agreement and to commemorate the intent of both buyer and seller to enter into the deal.

However, is the real estate binder a binding contract? After all, it is in writing and signed by both parties, it identifies the property and the sales price. Sometimes there is even an earnest money deposit that is made. Isn’t that enough to bind the two parties, as the name binder implies?

Whether the binder is a binding contract depends on the customs of your area and the language of the binder. Even within Connecticut, there are very different customs between say Fairfield County and the Hartford Area. In Fairfield County it is custom for attorneys to draft the final contracts. Therefore, it is common to find binders with language that calls for a further “superseding contract between the parties to incorporate the details stated herein”. In northern parts of Connecticut, some real estate agents specifically draft binders that are meant to binding real estate purchase and sale contracts, with language that allows for an attorney review period that is often 7 or 14 days from date of signing.

The three factors to look for when deciding when a binder is meant to be the contract are (1) does the language indicate intent to be bound without further contracting, (2) due the circumstances of the transaction indicate an intent to be bound, and (3) was the purpose of signing the binder to bind the parties to a final deal?

What Are the Real Estate Binder/Offer & Contract Customs in Fairfield County, Connecticut?

With the Fairfield County custom being that the attorneys draft the real estate purchase and sale agreement, how does this process with binders play out? It all starts with the real estate agents.

The real estate agents in Fairfield County know the custom and therefore, they use binders that call for a superseding contract. Many realtors do not use a binder, per se, but chose instead to use an “Information Sheet”, which has all the same contents as a binder, but does not have the signatures of the buyer or seller.

The binder or information sheet need to find their way to the Seller’s attorney. The Seller’s attorney then drafts a proposed contract using those terms and sends two unsigned copies to the Buyer’s Attorney. The Buyer’s Attorney reviews the contract, negotiates any changes that may be necessary, and has his client sign both originals, as well as provide a check for any deposit amounts due at contract signing. Both originals and the deposit funds are sent back to the Seller’s Attorney, who has the Seller sign both originals, and returns one original to Buyer’s Attorney and keeping one original for their file.

Get A Real Estate Attorney ASAP

Please understand that the sooner you get a real estate attorney involved in your transaction the better. You should have somebody to call and ask questions about the documents you are expected to sign BEFORE you sign them. After you sign, all we can do as your real estate attorney is explain what it says and means.

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What is the CFPB Addendum and Why is it Necessary?

The CFPB Closing Disclosure addendum is a document that is often attached to standard form real estate purchase and sales contracts after October 1, 2015. It became necessary because the CFPB, the Consumer Financial Protection Bureau, passed TRID, TILA RESPA Integrated Disclosures, a law that changed the settlement practices for real estate purchases and sales.

The purpose of the CFPB Addendum is to set forth the respective responsibilities of Buyer and Seller, and to specify the consequences of failure to comply.

How does the CFPB Addendum modify the Real Estate Purchase and Sale Agreement?

Due to the strict requirements of TRID, lenders for Buyers have strict time line requirements. Since they have to have the Closing Disclosure acknowledged by the Buyer at least 3 business days before closing, most Lenders are requesting final figures from all parties 10 days and sometimes even 14 days before closing.

The CFPB Addendum contains terms that:

1. Make parties aware that CFPB regulations of the Lender may cause delays ;
2. Make parties aware that any delay in getting the Lender figures may result in financial hardship for the other party, and lists the information that must provided to the Lender;
3. Waive any “time is of the essence” requirements in the contract;
4. Seller to provide figures 10 days before closing or waive their right to collect the adjustments;
5. Address discrepancies in real estate adjustment figures;
6. Seller agrees to meet Buyer requirements for any discovered condition issues during walk through;
7. Waive any Seller damages that may result from Closing Disclosure acknowledgement delays.

It should be noted that the CFPB Addendum is heavily in favor of the Buyer and drafted against the Seller. It protects the Buyer from Seller delays and Protects the Buyer from Lender delays, however, it places the burden of Buyer or Lender delays on the Seller without compensation.

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Title Search and Title Insurance in a Purchase or Refinance of Residential Real Estate

Lender Requirements and Buyer Protections

When you are buying residential real estate, you are paying money in exchange for title to the property. It is in the interests of the buyer, and the lending institution giving the buyer a mortgage, to make sure that title is clear and “marketable”. The buyer wants to make sure they are actually being buying the property rights as promised by the seller. The lender wants to make sure that the collateral on the mortgage is as promised; the property has marketable title and is clear of other encumbrances, such as mortgages or liens. So, how do the buyer and lender make sure that title is clear and marketable?

Title Search

The buyer will need to hire a real estate attorney to perform and/or review a title search. A title search reviews the history of the property by looking at the land records. The title search will provide the legal description of the property, showing exactly what the buyer is buying.

For purchases, all conveyances, mortgages, liens and releases are reviewed going back 40 years (called the “chain of title”). By reviewing the title search, the real estate attorney for the buyer will be able to tell if the seller owns the property, how the seller or sellers hold title, do they have the right to sell it, are there any liens or mortgages on the property that must be paid off to make title marketable, and if there are any relevant powers of attorney relating to the property.

The Buyer may also choose to do a municipal search, which reviews all zoning and building permit for compliance with local laws.

For a refinance, only a current owner search is necessary. Through a current owner title search, the real estate attorney performing the refinance closing will be able to see if the borrower is truly the owner, and what mortgages and liens must be paid off to give the new lender first priority.

Title Insurance

Lenders are not willing to rely on title searches and attorney opinion when it comes to making sure they have actual collateral when making mortgage loans. Therefore, Title Insurance was invented to cover losses in the case that a title defect is discovered after the closing on the property. Title insurance is available to protect both the Lender and the Buyer from title defects that could result in loss of property value, or even loss of ownership of the property. In Connecticut, real estate attorneys act as title insurance agents and will prepare and secure the policy on the Buyer’s behalf.

For a purchase, the Lender will demand that the Buyer purchase title insurance to cover the Lender. The Buyer will also have the option to purchase additional coverage that will protect their interest in the property.

For a refinance, the Lender will similarly demand title insurance to cover their interest, but no Buyer policy is necessary. The homeowner will still be covered by the title insurance from their purchase. It should be noted that even if the refinance mortgage lender is the same as the purchase mortgage lender, a new title insurance policy will need to be purchased.

What does title insurance cover?

1. Insures against anyone else making a claim that he or she is the owner of all or part of the property;
2. Insures against liens or other encumbrances that were missed by the title search or misindexed by the town clerk;
3. Can offer protection of ownership even where defects in title marketability exist (such as old unreleased mortgages);
4. Insures a legal right of access (though this may be just by foot);
5. Insures against violations of government regulations, but only those violations listed on the land records;
6. Insures against the exercise of eminent domain in certain situations;
7. Insures against fraudulent conveyances in the chain of title;
8. Any defect in title that arises from the date of the policy (the closing date) and the date the deed and mortgage are recorded;
9. For the Lender, it insures the enforceability of their lien created upon the title of the property by the mortgage;
10. For the Lender, it insures the priority of their insured mortgage lien against other liens or encumbrances;
11. For the Lender, it insures the priority of their mortgage lien against liens for services, labor or materials for work done on the property (in conjunction with an Owners Affidavit signed by the Seller);
12. For the Lender, it insures the assignment and assignability of any mortgages that are assigned to and assumed by the Buyer;
13. Pays attorneys fees and costs of defending title and the insured mortgages.

There is also available an expanded title insurance policy; which is a good idea for Buyers and may be necessary for the Lender in certain situations. In addition to the protections of a standard title insurance policy, the expanded title insurance policy also covers:

1. Correcting or removing existing violations of restrictive covenants;
2. The inability to obtain building permits due to existing violation of subdivision regulations;
3. Removal of existing structures that were built without proper building permits;
4. Removal of existing structures due to non-compliance with zoning laws;
5. If the property cannot be used as a single family home due to zoning regulations;
6. Removal of an existing structure that is then found to encroach upon the land of a neighbor;
7. If a neighbor builds a structure that encroaches upon the property of the insured;
8. For one to four family homes that have a valid certificate of occupancy and no recent boundary line changes, offers survey coverage even without a survey.

What does title insurance not cover?

1. Government regulations for which a violation was not recorded on the land records;
2. Rights of eminent domain where a notice of exercise was not recorded on the land records;
3. Defects, liens or encumbrances that:
   1. were created or agreed to by the insured;
   2. known by the insured but not disclosed to the title insurance company;
   3. that do not result in any loss to the insured;
   4. were created or attached after the date of the policy;
   5. resulting from the Buyer’s lack of “bona fide purchaser” status.
4. For the Lender, enforceability issues created by the Lender’s inability to meet Connecticut business practices requirements;
5. For the Lender, enforceability issues created by the Lender’s lack of compliance with consumer protection or truth in lending laws;
6. Any liens for services, labor or materials for work performed after the date of policy and not paid for by mortgage proceeds;
7. Any claim arising from bankruptcy or other creditors’ rights laws.

How much does title insurance cost?

The cost of title insurance is set by statute and controlled by the legislature. With that said, title insurance premium are set increase beginning January 1, 2016 for the first time in decades.

With that said, we will look at the pricing structure at the time of the writing  of this article, even though we are only weeks away from the increase.

Let’s use the example of a house that will cost $200,000 (the amount of Owner coverage) and where the mortgage will be for $170,000 (the amount of Lender coverage). A standard lender title insurance policy will cost $607.00. If the Buyer decides to purchase a standard owner policy in addition to the standard lender policy, the total for both is $750.00. Expanded coverage for both Buyer and Lender would cost $825.00 for both policies. This is money well spent for the Buyer, as the title policy remains in effect until the property is sold.

In a refinance, there is no need for an owner policy as the owner is not conveying the property and will be covered by the title insurance policy from their purchase. The Lender policy will need to be purchased to cover the new mortgage, even if the refinance lender is the same as the purchase lender. The good news is that policy is discounted so that a $170,000 lender policy for a refinance would only cost $400.00.

At any time you can get a title insurance quote from the Connecticut Attorneys Title Insurance Company on CATICulator.com.

The Bottom Line on Title Insurance

The title search and title insurance are sometimes unanticipated and unwelcome expenses when the Buyer is presented with their closing costs. However, the Lender policies are required by the mortgage companies and banks, and the Owner policy is a relatively cheap addition that provides a lot of protection. Expanded policies offer buyers the peace of mind that they will not have to incur costs of compliance with violations that were not discovered before the purchase, and even some issues that arise after the purchase. If the Lender MANDATES title insurance to cover its investment, shouldn’t the Buyer similarly protect themselves?

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