The Two Faces of Quiet Title: Offensive and Defensive

What is Quiet Title? I ask this question to get the reader to think about the two faces of Quiet Title, because most homeowners I have worked with do not understand both. They file a Quiet Title action expecting it to solve everything. It does not.

Quiet Title has two faces. First, it is an equitable Cause of Action. The homeowner files suit to identify who may have an enforceable equitable claim to their title. Second, it is an equitable remedy that removes a cloud or encumbrance on title. The problem is that the homeowner must meet their state’s statutory requirements for the remedy to be granted. Most states require that no enforceable equitable claim to title exist, evidenced by an obligation such as a properly secured mortgage loan security instrument.

A thorough quiet title investigation can help identify whether such a cloud exists before you file. Filing at the wrong time or in the wrong way results in dismissal and creates bad case law that harms other homeowners.

Face One: Cause of Action

As a cause of action, Quiet Title is an offensive move. The homeowner takes the initiative. They identify the parties who claim an interest in the property and ask the court to determine whether those claims are valid. The homeowner is saying: there are parties who claim to have an interest in my property, and I want the court to adjudicate those claims.

Face Two: Equitable Remedy

As a remedy, Quiet Title is what the court grants after the cause of action has been adjudicated. If the court determines that the parties claiming an interest do not have a valid, enforceable claim, the court can quiet the title by removing the cloud. But the remedy is only available if the statutory requirements are met. If an enforceable equitable claim exists against the property, the court will not grant the remedy, regardless of whether the cause of action was properly pleaded.

The 12(b)(6) Trap

Here is what happens. The Quiet Title complaint gets remanded to federal court based on diversity and the $75,000 monetary threshold. Once in federal court, the opposition files a motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.

“Rule 12(b)(6) is designed to screen out cases where ‘a complaint states a claim based upon a wrong for which there is clearly no remedy, or a claim which the plaintiff is without right or power to assert and for which no relief could possibly be granted…’” Port Auth. v. Arcadian Corp., 189 F.3d 305, 312 (3d Cir. 1999).

The 12(b)(6) trap is the most common way Quiet Title complaints die before trial. The defendant argues the complaint fails to state a claim upon which relief can be granted. The court looks at the complaint, sees only state law claims, finds no federal cause of action pleaded, and agrees there is no basis for relief. The case is dismissed. The homeowner loses before the facts were ever tested.

Do Not Put the Cart Before the Horse

Do not put the cart in front of the horse. All actions must be timely, and Quiet Title as a cause of action should not be your opening move. The action I would look at first is a determination of the status quo for all interested parties claiming an enforceable equitable interest to real property.

A Declaratory Judgment would move the courts to address the controversy by identifying whether rights have been properly acquired in accordance with statutory requirements of law. Who has a valid claim? Was the assignment properly executed? Was the note properly transferred? Once the court answers these questions, the homeowner is in a much stronger position to seek Quiet Title as a remedy.

The two faces of Quiet Title are not a problem to be avoided. They are a tool to be understood. When you understand both faces, you know when to file, how to file, and what to ask for. A chain of title analysis provides the documented evidence needed to support either approach. When you do not, you file at the wrong time, in the wrong way, and you lose before you ever get to tell your story.

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Joseph Esquivel, Mortgage Compliance Investigators. Copyrighted, all rights reserved.