What Is an Affidavit of Title? Definition, Purposes, Contents

What Is an Affidavit of Title?

An affidavit of title is a legal document provided by the seller of a piece of property that explicitly states the status of potential legal issues involving the property or the seller. The affidavit is a sworn statement of fact that specifies the seller of a property holds the title to it. In other words, it's proof that the seller owns the property.

Understanding an Affidavit of Title

An affidavit of title is designed to protect the buyer from outstanding legal issues that might be facing the seller. If an issue arises after a transaction, the buyer has possession of a legal document—one that contains sworn statements by the seller—that can be used in court should some kind of legal action need to be taken.

Most states require an affidavit of title as part of the legal paperwork required for transferring property from one party to another. An affidavit of title is also generally required by the title company before it will issue title insurance.

Contents of an Affidavit of Title

Guidelines for an affidavit of title can vary from state to state. Generally, the basic contents include personal details about the seller, including a name and address. In addition, there are statements to the effect that:

• The seller is the true and exclusive owner of record for the property being sold.
• The seller is not concurrently selling the property to anyone else.
• There are no liens or assessments outstanding against the property.
• The seller has not declared bankruptcy or is not currently in bankruptcy proceedings.

Beyond the items above, there can be specific exclusions given in an affidavit of title. For example, the affidavit of title may note that there is a mortgage remaining on the property that will only be paid off after closing.

An affidavit of title can mention a specific lien or issue does exist, but the title often outlines the process of how the condition is being handled. It should also mention things like easements, encroachments, and other issues that may not be shown on public records.

If an exception in the affidavit of title is an area of concern for the buyer, the buyer can notify the seller that the item must be remedied prior to closing. This could be as simple as having the seller clear a lien or something more involved such as paying for an updated survey of the land allotment and any easements upon it.

Purpose of an Affidavit of Title

An affidavit of title protects a buyer of real property in a variety of ways. This legal document often serves three main purposes:

• Protect a buyer from unexpected legal issues. An affidavit of title grants the affidavit holder a legal claim over property and offers protection on judgments over the property. Without the affidavit, the buyer may encounter boundary line disputes or legal issues relating to extenuating circumstances regarding the property.
• Protect a buyer from becoming responsible for liens. A property may be subject to unpaid liabilities including liens. Without an affidavit of title outlining the pending liabilities tied to a property, the new buyer may become responsible for HOA liens, mechanic's liens, or government liens due to unpaid property taxes.
• Prevent a buyer from becoming a victim of fraud. An affidavit of title is a sworn statement from the buyer that all documents are in order and the site has been prepared for sale. The affidavit confirms the property is not being sold to any other parties, no other co-owners will exist, all deeds are valid and not forged, and the seller is not impersonating ownership of the land.
  

Special Considerations

This document is also called an owner's affidavit, seller's affidavit, owner's declaration, or borrower's affidavit. Though it's most common is real estate transactions, the affidavit of title also applies to other transactions such as transfer of a car title.

The affidavit of title will generally contain specific language. The document must include the seller's name, address, and statement from the seller indicating they are the owner of the property for sale. The affidavit must also state whether there are liens on the property, whether the seller has had a bankruptcy, whether the seller is selling the property to other parties, and if there are any assessments against the property.

If there is a lien on the title, the seller can choose to have the lien removed by satisfying the obligation prior to sale. For example, if you remodeled your bathroom but failed to fully remit payment to the contractor, the contractor may place a mechanic's lien on your home.

To remove the lien, you must satisfy your debt, obtain proof of payment, and request the lienholder remove the lien. A lien is removed by filing a Release of Lien on Real Property form and recording the document at the country recorder's office.