Do you really own the home you live in?
If you are currently living in a property that you inherited but the deed has not been transferred into your name, you may be surprised to learn that, under the law, you are technically not the owner. This legal situation is known as “tangled title.” A tangled title negatively impacts a property's current occupant in a number of ways. It can also harm generational wealth and even contribute to fraud.
For many households, most of their wealth is tied up in their home. However, until a tangled title is resolved, you cannot take full advantage of your home's value. Untangling a tangled title is often a complicated legal process that requires attorney assistance. There are costs, but the costs of not straightening out a title could be much higher in the long term.
How a Title Can Get Tangled
Title and deed are legal terms used in real estate. The person who holds the title to a property is that property's legal owner. A deed is the legal document used to transfer property ownership from one person to another. Although a deed is an official written document, title merely refers to the concept of ownership rights. You cannot actually hold a home's title in your hands.
In a home purchase transaction, a deed transfers the title of the home from the seller to the buyer. A deed also transfers homeownership to a person who inherits a home after a parent or other family member has passed away.
Titles can often get tangled in the intrafamily transfer of homeownership. A tangled title most commonly occurs when the person whose name is on the deed passes away and a surviving relative continues living in the home without their name being on the deed.
For example, you have been living with your aging mother and caring for her. She dies and you stay in the home. You assume it is yours. Maybe her will specifies that you inherit the home. But an inherited interest is not enough. Until your name is on the deed, the home is not legally your property. You are now dealing with a tangled title.
Tangled titles are more common than you might think. According to the Philadelphia Inquirer, more than ten thousand properties in Philadelphia, or about 2% of the city's residential properties, have tangled titles.
Consequences of a Tangled Title
A tangled title places you in legal limbo, making it harder to do some things and impossible to do others. Tangled titles also create financial risks for individuals who live in a home without their name on the deed. Until you untangle a title, you may experience the following:
- difficulty setting up utilities and obtaining homeowner's insurance
- inability to sell the property or take out a home equity loan
- inability to qualify for financial assistance to fund repairs
- inability to easily transfer the property to the next generation or a spouse
- ineligibility to negotiate with a mortgage company or assert a tax payment plan, placing you at greater risk of foreclosure
- risk of deed theft
- risk to wealth building
The typical US household holds nearly 70% of its wealth in its primary residence. And, in Philadelphia, tangled titles threaten more than $1.1 billion in household wealth.
How to Untangle a Tangled Title
Remedying a tangled title can be relatively straightforward if the homeowner of record was the sole property owner, they left a will, and the will specifies to whom ownership of the property passes upon the homeowner's death.
The deceased's property goes through a court process known as probate. At the conclusion of probate, a new deed is drafted and recorded, and the heir becomes the owner of record. But a number of factors can complicate probate, including lack of a will, multiple heirs with an ownership claim, intrafamily conflicts, and shared ownership of the property.
Probate can take a year or more, and there are a number of fees involved, such as administrative costs and attorney's fees. A probate lawyer is not always required, but it may be in your best interest to get help from an attorney, especially if things get complicated. The Pew Charitable Trust estimates that, via probate, it costs around $9,000 to untangle the title of a property valued at approximately $90,000.
Actual costs will vary depending on your situation. Because every property and every inheritance situation is different, you may want to talk to an attorney about what makes the most sense for you. A tangled title should be addressed promptly, before a situation arises that further complicates things. An estate planning attorney can also help you set up a revocable living trust to ensure that title issues do not arise again once a property is in your name and that the property does not have to go through the probate process again after your death.
 Michaelle Bond, Tangled Titles in Philly Threaten More Than $1.1 Billion in Generational Wealth, Phil. Inquirer (Aug. 4, 2021), https://www.inquirer.com/real-estate/housing/dead-homeowner-unclear-ownership-tangled-title-philadelphia-deed-pew-charitable-trusts-20210804.html.
 How “Tangled Titles” Affect Philadelphia, PEW (Aug. 17, 2021), https://www.pewtrusts.org/en/research-and-analysis/reports/2021/08/how-tangled-titles-affect-philadelphia.