The following article was provided by William O’Connell, Maryland State Counsel for First American Title Insurance Company.
The Maryland Land Title Association (MLTA) saw a gap in the state’s laws when it came to quiet title actions. As result, the MLTA proposed legislation to create a statutory process for completing such actions. With the support of the Maryland Bankers Association, the Real Property Section Council of the State Bar, and the Maryland Association of Realtors, HB 920/SB 509 – Actions to Quiet Title, will become law effective October 1, 2016. Del. Tony O’Donnell and Del. Kathleen Dumais sponsored HB 920 and Senator Steve Waugh sponsored SB 509. “Delegate Tony O’Donnell really worked hard with his colleagues in both houses to skillfully keep the bill moving forward,” said Bill Pitcher, MLTA’s lobbyist who was also instrumental in keeping the bill moving.
So what does the legislation actually do?, you ask. It does not change any of the common law that has developed over many years. Instead, it codifies some of it. A quiet title action is a lawsuit to establish an individual’s right to ownership of real property against one or more adverse claimants and, thus, “quiet” any challenges or claims to the plaintiff’s title. The need for such a suit usually arises, for example, when there is some question about clear title to the real property, there exists some recorded problem (such as an old lease or failure to clear title after payment of a mortgage), an error in description which casts doubt on the amount of property owned, or an easement used for years without a recorded description. The plaintiff in a quiet title action seeks a court order that prevents the defendants from making any subsequent claim to the property. Quiet title actions become necessary at times because real property may change hands often, and it is not always easy to determine who has title to it.
The laws related to quiet title actions vary from state to state. Some states have statutes that lay out in precise detail what is required to be done by the plaintiff and what the plaintiff will obtain when completed. Other states allow courts to fashion most of the laws regarding quiet title actions. In Maryland, under current law, we have a statue that allows one to bring an action to quiet title, but our statute is lacking a process to be followed. As a result, members of the MLTA were seeing inconsistent processes used from case to case and from county to county.
Because of the uncertainty in the process of the proceeding under the current law, it is often difficult to determine what the plaintiff did in the proceeding to establish her title. And because there is no established process, attorneys often became frustrated when title examiners or title insurance underwriters refused to insure title in one who has brought an action to quiet title. The bill solves these problems by giving the courts, and those seeking to quiet title to real property, clear direction on what is needed to establish title in such a proceeding, and the effect of a judgment quieting title. The end result is that bona fide purchasers who rely on the judgment and take title from the plaintiff or the plaintiff’s successors without knowledge of a defect in the proceeding are protected.
The highlights of the bill are listed below.
- Requires the plaintiff to set forth the particulars of the plaintiff’s claim to title in the complaint.
- Requires the plaintiff to verify (i.e. swear under oath as to the truth thereof) the facts contained in the complaint.
- Requires the defendant to verify his or her answer to the complaint.
- Requires the plaintiff to give both a legal description to the property and its common designation (i.e. address), if any.
- Allows a defendant to disclaim any interest in the property or allows judgment to be taken without answer, and in such cases, the plaintiff will not be allowed to recover costs against the defendant.
- Requires the plaintiff to name as defendants the persons having adverse claims that are of record or known to the plaintiff or reasonably apparent from an inspection of the property.
- Requires service by publication to include the legal description of the property and its address, if any, along with the names of the defendants who cannot be found after a diligent search.
- Allows “all persons unknown, claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to plaintiff’s title, or any cloud on plaintiff’s title to the property” to be served by publication on the plaintiff’s affidavit showing plaintiff’s due diligence to ascertain the identity and residence of such unknown defendants. Once served by publication, such unknown defendants are treated like any other defendant.
- Allows for the recording and indexing of the judgment in which the grantor is identified as the party against whom the judgment was entered and the grantee is identified as the party in whose favor the judgment is entered.
- Solves the problem of what to do when title is vested in the Personal Representative of the Estate of a decedent when no estate has been opened by interested persons.
- Does not allow the Court to enter a judgment by default but requires in all cases, evidence of the plaintiff’s title to be presented at a hearing even when no defendant has appeared in the action.
- Provides that a judgment entered in the action is binding and conclusive, regardless of any legal disability, on all persons known and unknown who were parties to the action and who have any claim to the property, whether present or future, vested or contingent, legal or equitable, several or undivided and all persons who were not parties to the action and who have any claim to the property that was not of record at the time the action was commenced.
- A judgment does not, however, affect claims of record or of persons who were actually known to the plaintiff or would have been reasonably apparent from an inspection of the property at the time the action was commenced and who were not made parties to the action.
- Protects bona fide purchasers for value from a collateral attack on the judgment, whether based on lack of actual notice to a party or otherwise.