Real Property Color of Title

“Color of title” is a phrase used in property law that refers to a title to real property. It may have the appearance of good and valid title to a parcel of property, but in reality, does not provide full, legally recognized title to the parcel. A person who holds property under color of title does not hold actual title for a variety of possible reasons, e.g., adverse possession. Or, there is a significant defect in the written document supporting title, e.g., a deed, that makes the document invalid.

Thus, according to the color of title property laws, color of title, that is, a title that is defective, fails to establish true ownership of land. Color of title is also sometimes referred to as “apparent title,” because at first glance it may appear that the documents establishing title are legally valid. In fact, however, they are not. Color of title is based on written documents that purport to establish title, but are not legally sufficient for that purpose.

For example, suppose a buyer purchases a parcel of real estate. By the close of the sale transaction, the buyer should have possession of the deed, which gives the buyer title in fee simple, i.e., full ownership rights to the parcel. However, if there is some type of defect in the deed, such as its failure to comply with the real estate standards in the area, then the defect may render the title invalid.

Taking this example one step further, suppose the buyer and the other parties to the transaction do not notice that there was an error with the documents supporting the title. So, as is required with most real estate purchases, the buyer submits their real estate paperwork to the local registry office or to the county recorder of deeds where the property is situated.  

Without inspecting the documents further, all of the parties most likely believe that the buyer’s title is valid. Yet, because of the errors in the terms of the written documents supposedly verifying title, the buyer does not possess true title. Instead, the buyer has “color of title.” A person who possesses land under “color of title” only cannot convey title to others.

What are Some Examples of Color of Title in Real Property?

Following are some additional examples of common situations that involve color of title:

• If a buyer who is purchasing a parcel of real property believes that they are obtaining a valid title to the property, but later it turns out that the previous owner’s title to the property was actually defective. Because of the defect the buyer’s title is now considered to be defective as well;
• When two or more people purchase a particular piece of property and receive separate deeds to that same parcel of real estate;
• If a deed to a specific property was executed in a manner that makes it defective or questionable, e.g., the deed was forged, or the deed was not properly delivered and accepted or never recorded.

In each of these situations, the buyer who holds a defective deed holds the property under color of title only and does not have good title or full ownership of the property.

What Are Some Legal Issues Associated with Color Of Title Adverse Possession?

Another scenario in which color of title issues frequently arise is when a person acquires a parcel of land by adverse possession. Adverse possession is a way in which a person can obtain land by simply occupying, or “possessing” it without any existing right to do so. Color of title adverse possession means that a person has color of title through adverse possession rather than a valid purchase transaction.

If the person successfully acquires land through adverse possession, then they may have complete physical control of that particular property, but they will not have title to it. The difference between possession and title is that title establishes true ownership, whereas possession does not.  Land owned by the federal government, state governments or local governments cannot be acquired through adverse possession.

Thus, the color of title issue may come into play in either of two common situations. One is when the adverse possessor attempts to sell the property and cannot produce legally valid title in fee simple. The other is when the legal owner tries to evict the person who claims adverse possession from the land.

There are several steps to acquiring land through adverse possession, and these may vary depending on the relevant laws of the state where the property is located. Title to property and other issues of property rights are determined by the law of the state in which the property is located.

Generally a person has to live on the land or otherwise possess it and then comply with some strict requirements to complete the right to claim ownership. The conditions that must be satisfied are as follows:

• A person must live on the land for from 12 to 20 years, depending on the state in which the land is located; color of title becomes important here, because some states shorten the required period significantly if the person living on the land has color of title;
• The person who claims adverse possession must be the only occupant of the land;
• The occupation or possession must be done in such a way as to let the true owner know that the occupier claims ownership;
• Again, a person who is in adverse possession has an advantage if they also have color of title; if the person occupied only a portion of a parcel of property, if they have color of title, they can eventually gain ownership of the entire parcel. If they do not have color of title, they can only acquire ownership of the portion actually occupied through adverse possession;
• To gain title a person in adverse possession must also have paid property taxes and improved the property in some way, e.g. by building a wall around it.

Finally, in order for an adverse possessor to gain valid title, they must bring an action to quiet title in a civil court in which the land is located that has jurisdiction over real property disputes.

What Does Having Color of Title Signify?

The law of adverse possession is helpful to a person who occupies property under color of title, i.e. thinking that they own it but with documentation that is legally faulty. When they discover that they do not have full, valid title, they can bring an action to quiet title, that is to perfect their title, under the theory of adverse possession. 

They would have to prove that they lived on the land for the necessary period of years, paid the taxes and improved the land, all the while believing that they had good title. Under the theory of adverse possession, the court might well find that they have acquired good title through adverse possession. 

If the theory of adverse possession does not work, the owner with color of title would try to quiet title under other theories, depending on the nature of the defect in the title that they have. In many situations the law may offer a pathway to repair the defect in their title.

Do I Need to Hire an Attorney for Color of Title Issues

If you have discovered that there is a defect in your title to real property that you own, you want to consult an experienced real estate lawyer. There may be a variety of ways to solve your problem depending on the situation. It might require negotiation and a financial transaction, or it might require a civil suit to quiet title. 

This area of the law is complex and technical and you will get the best result for yourself with an experienced real estate lawyer to represent you.