When taking a lien on real estate, you should be wary of the concept of “slander of title.” Slander of title results when a false and malicious statement is made against a person’s title to real property. In some circumstances, a mortgage lien could be the subject of a slander of title lawsuit.
You are protected from liability if your lien is a consensual lien from all of the owners of a tract of real estate. Thus, before taking a lien against real estate, it is crucial that you determine the exact location and all owners of the real estate. This determination is best made by obtaining a title insurance commitment and survey.
A title insurance commitment will disclose all owners and the recorded legal description of the real estate. The survey will identify the location of the real estate and all encroachments and overlaps which affect the real estate. After reviewing the commitment and survey, you should properly draft the mortgage so that the lien is limited to the real estate owned by your borrowers.
If you have any questions about locations of boundaries, owners or other items disclosed by your commitment or survey, please contact your attorney to review the transaction.
Author: Jason P. Lueking (bio)
Phone: 317.464.1591
email: jlueking@bamberger.com
Tags: Jason Lueking, real estate lien, real property, title insurance