Color of title refers to a claim to title that appears to be legally valid but may be defective. As you probably know in real estate, things can be complicated, so it’s vital to understand all legal concepts fully.
Before we jump into specifics, though, if you have no idea what title is – title exists to prove ownership. Having title is not a physical thing, though. It’s NOT like a deed where there is an actual paper in the courthouse that says you own the property. No. Title is a legal concept. It’s worth mentioning this because, like title, color of title is a legal concept, not a physical thing.
Now with that being said, let’s take a look at the term color of title.
What is Color of Title?
Definition: The legal concept of a claim to title appearing to be legally valid, but in actuality, the claim is defective.
So what does this mean? Well, color of title refers to a claim that may have the appearance of having valid title to that property, but in reality, the person either does not hold actual title, or there is a significant defect in the deed/written documents supporting title, that makes it invalid.
It’s also worth noting just because the claim is invalid, that doesn’t mean it can’t turn into a valid claim, to do that the titleholder would need to go through something called adverse possession.
Color of Title and Adverse Possession
Color of title is often discussed in adverse possession claims. Adverse possession is a legal principle under which a person who does not have legal title to a property acquires legal ownership. If adverse possession is claimed under color of title, usually the claims are met sooner or in an easier fashion.
What to Know for the Real Estate Exam
Well, you need to remember what color of title means. Remember color of title is a claim appearing to be legally valid, but in actuality is defective. You should also find out if it’s a requirement in your state for adverse possession claims.