Tangled Title: What Is It and How To Avoid It

Across Pennsylvania, there are thousands of properties that have a ‘tangled title’ where the person living in the home does not actually own the home. It’s a pervasive problem, particularly in urban areas. The sooner it is identified and fixed, the better. When there is tangled title, mortgages can’t be refinanced. Repair grants, property tax rebates and other income-sensitive services will be denied. In the worst cases, homes are abandoned. 

Consider this tangled title example: Jim and Sally, who had 4 children, bought a house in 1950 for $10,000. Jim passed away in 1985 and a few years later, Sally passed away. Their daughter Sheila had been living in the house, along with her children, as a caregiver for several years and continued to reside in the house after her parents passed on. Neither Jim nor Sally had a Last Will & Testament nor did they do any estate planning.

Fast forward 30+ years later, Sheila is still living in the house and is now having health issues herself. She has recently realized that when applying for a grant, it was rejected because the deed is not in her name. Instead, the house is still listed under Jim and Sally’s name. It was never transferred upon their death, as the estate was never probated.

Had there been a Last Will & Testament that was probated, this situation would have been resolved long ago. Perhaps Jim and Sally wanted to bequeath the house to Sheila. But without a will, Jim and Sally’s four kids would inherit the property by law. Yet, two of Sheila’s siblings are now deceased, and each of them had three kids each. Sheila’s brother, still living, has 2 children. Sheila, her brother, and the six heirs of the two deceased siblings all have rights to the property now.

Tangled title means addressing several problems, but two of the most significant are as follows:

  • Inheritance taxes were never paid on this house, nor was it probated. It is accruing interest on taxes after all these years, and it needs to be addressed and negotiated with the Department of Revenue ASAP. 
  • Whether or not Jim and Sally intended for Sheila to be the sole beneficiary of the house, she is not. Her siblings, including the children of her deceased siblings are all beneficiaries. That means for Sheila to be put on the deed, eventually she would need to resolve the tangled title with all of the other beneficiaries.

As you can see, the more years that pass, the more difficult it can become to untangle a real estate title because the beneficiaries and taxes multiply. An attorney likely will charge thousands of dollars to resolve this type of matter, on top of the inheritance taxes that have accrued.

The best way to ensure that there is no tangled title is to create a well-crafted estate plan, and keep it updated over the years. Ensure your family is aware of your wishes and that they know where your important documents are kept (will, deed, etc.). If you intend for the house to stay in the family and not be sold, ensure that there is enough liquidity in the estate (cash, savings, life insurance, etc.) to cover the costs of inheritance taxes and other administrative expenses.