What is the Marketable Record Title Act (MRTA)?
The Marketable Record Title Act is a piece of legislation adopted by many states in the United States with the aim of clarifying and simplifying real property titles. Its primary objective is to extinguish certain old and dormant interests in real estate, thereby providing buyers with a more secure and marketable title. (see Robin v. Crowell (2020) 55 Cal.App.5th 727.)
In California, some interests in California are not valid unless recorded. For example, a homestead declaration, an abandonment of a homestead, a power of attorney to execute a mortgage, the revocation of a power of attorney to convey or encumber real property, a mechanics lien claim, the involuntary liens of attachment, a judgment and execution, and restrictive covenants must be recorded to establish a lien or interest in real property. Other interests, however, may be valid even if not recorded until later. As such, it is important to provide certainty to owners of property about their rights to property, which is what the Marketable Record Title Act seeks to provide.
Any person who has the legal capacity to own land and who has an unbroken chain of title of record to any interest in land for a certain time, shall be deemed to have a marketable record title to that interest, subject only to the exceptions and conditions stated in the act.
A person shall be deemed to have an unbroken chain of title when the official public records disclose a conveyance or other title transaction, of record for a certain period of time, at the time the marketability is to be determined, which purports to create an interest in land, either in the person claiming the interest or in some other person from whom, by one or more conveyances or other title transactions of record, the purported interest has become vested in the person claiming the interest and, in either case, with nothing appearing of record purporting to divest the claimant of the interest.
In some states, the unbroken chain of title can be as short as twenty years to establish clear ownership, while in others it may need to extend for fifty years or even longer. These variations are typically determined by state statutes, which dictate the requirements for establishing a clear and marketable title to a property.
It’s important for property owners, buyers, and sellers to be aware of the specific requirements in their state regarding the length of the unbroken chain of title, as it can have significant implications for the legality and marketability of the property.
What you should know about Marketable Record Title Act
One of the central provisions of the MRTA is the automatic extinguishment of certain old interests in real estate after a specified period of time. These interests may include old liens, easements, and restrictions that are not actively preserved by their holders. While the MRTA automatically extinguishes certain interests, it typically requires that holders of any interests they wish to preserve must take affirmative steps to preserve them by filing appropriate notices or actions within a specified timeframe.
Any person claiming an interest in land may preserve and keep effective that interest by filing of record, during the unbroken chain time immediately following the effective date of the root of title of the person whose record title would otherwise be marketable, a written notice, duly verified by oath, setting forth the nature of the claim. The notice shall have the effect of preserving the claim of right for a certain period after its filing. The notice may be filed of record by the claimant or by any other person acting on behalf of any claimant.
The MRTA aims to ensure that property titles are marketable, meaning they are free from defects and encumbrances that could affect their value or marketability. By extinguishing old and dormant interests, the act helps streamline the title examination process for prospective buyers.
The MRTA may contain exceptions for certain types of interests or transactions, such as government rights, mineral rights, or interests expressly preserved by statute.
Why should Marketable Record Title Act matter to property owners?
For property owners, understanding the Marketable Record Title Act is crucial, especially when buying or selling real estate. Here’s why it matters:
- Clear Title: The MRTA helps ensure that property titles are clear and marketable, reducing the risk of disputes and complications during real estate transactions.
- Streamlined Process: By extinguishing old and dormant interests, the MRTA streamlines the title examination process, making it easier and more efficient for buyers to verify ownership rights.
- Enhanced Marketability: Properties with marketable titles are more attractive to potential buyers, potentially increasing their market value and liquidity.
- Compliance: Property owners must be aware of the MRTA’s requirements to preserve any interests they wish to maintain in their real estate holdings, thus avoiding unintentional loss of rights.
How Underwood Law Can Help
In the complex landscape of real estate law, the Marketable Record Title Act stands out as a significant statute aimed at simplifying property titles and facilitating smoother transactions. By automatically extinguishing certain old interests and promoting marketable titles, the MRTA enhances the clarity and certainty of property ownership rights, benefiting both property owners and buyers alike. Understanding the provisions and implications of the MRTA is essential for navigating the intricacies of real estate transactions with confidence and clarity. Contact us today.