by Evin Bachelor

How your real estate is titled is critical to your farm succession plan and is often a large focus of the planning process. Attorneys quickly learn to “trust but verify” what clients tell us about how real estate is owned and titled.

For example, a husband and wife may know that their names are both on a deed, but they may not know whether the deed contains necessary survivorship language to avoid probate. 

In Ohio, the absence of survivorship language means the surviving spouse must file an estate with the probate court to truly own the other half of the real estate. Ownership and clear title are critical to sell, transfer or mortgage real estate. 

Whereas, if husband and wife confirm with their attorney that the real estate is titled in survivorship, they may avoid an unexpected expense and hassle when either husband or wife passes away.

As another example, members of a real estate LLC may know the tenant pays rent to the LLC, but have they confirmed the real estate was actually transferred to the LLC?

In Ohio, the limited liability company structure only provides liability protection if the real estate is properly titled to the LLC, and the LLC is operated as a true separate business. Failure to transfer the real estate to the LLC could result in the individual owners having personal liability in the event of an accident or claim.

When a loan is paid off

As another example, a person who purchased real estate through a personal loan secured by a mortgage may know he or she paid off the loan, but have they confirmed the mortgage has been released?

When the person goes to sell the real estate or use the real estate as collateral, a title exam will find whether the mortgage has been released. An unreleased mortgage serves as a cloud on title, meaning a lender or buyer may not have good assurance that some third party will not claim a right in the property at a later date.

Many parties under a personal loan forget they need to release the mortgage. Ideally, the property owner can track down the creditor and have them sign a release. If the creditor cannot be located, the property owner’s remedies to clear title on his or her own are not cheap, quick or simple. 

Or, if the creditor has passed away, many title examiners and title companies would require an estate be opened to appoint an executor to sign a release. Again, not a cheap, quick or simple route.

In all cases, confirming the titling requires looking at documents filed with the applicable county recorder’s office. What shows on the county auditor’s website, or the property tax bill, is only part of the picture. 

Bachelor is an attorney with Wright and Moore Law based in Delaware, Ohio. Contact him at [email protected] or 740-990-0750, or visit ohiofarmlaw.com.