What is “Color of Title”?
Color of title is defined in the American Heritage Dictionary of the English Language (4th ed. 2000) as "a document or instrument that purports to give legal title to an interest in property" or "identification of a person or group as owners of land." The term is often used in close proximity to another term, "title by adverse possession," which describes a legal concept in which a party acquires ownership of another’s property by possession and use, under claim of title, for a certain period of time. Color of title is an important aspect of the adverse possession analysis but carries its own significance and must be understood on its own to properly apply it in the context of adverse possession.
In the historical context, color of title was parol evidence for a claim of title that was adequately described in a deed or a writing, but is now imperfect because of the death of one party or the lost original deed. In fact, the common law definition of color of title was merely possession under claim of a title from a non-owner, without regard to the validity of any part of the title . The presumption that color of title was not validly transferred to the occupant’s predecessors was so great that at common law, evidence would be inadmissible to prove that the occupant had color of title and that evidence was limited to the deed itself. Today, any defects in the title under a document which constitutes color of title may be cured by estoppel or ratification if the defects are not material. Exceptions to this policy include fraud, mistake, forfeiture, rights purchased for valuable consideration and other factors.
In Texas, once a color of title has been properly established, the doctrine will perfect the title to the land within the limits of the color of title, even though the original source of title is nonexistent or void. Importantly, color of title properly used prevents an otherwise sufficient claim of title by adverse possession from being defeated by a minor deficiency in the title. Though color of title is an essential portion to the determination of a claim of title by adverse possession, it is merely parol evidence by itself of a valid source of title, and does not constitute the title itself—though it does create an indefeasible title once the occupant is in possession under claim of title for the statutory period.
History of Color of Title
While the doctrine of color of title is deeply rooted in our common law tradition, the early American lawyers and judges were very aware that it had no place in a free society. Its origins lie in the feudal system that effectively rendered all land in the hands of a supreme monarch – commonly known as "the crown." With no effective title to speak of, "all subjects of the king were tenants on the king’s land, even though they might have been long in uninterrupted possession of a particular parcel of land," wrote a 19th century commentator on the English common law. There was no incentive for citizens to make the effort to improve their properties, especially if improvements were to disappear with the death of the tenant. The moral of the story was that the common law recognized but one rule: the king’s title must prevail. Otherwise title was a matter of grace and concession extending from the king to his subjects. By the 13th century, however, some English monarchs realized that their revenue depended upon a sufficiently defined and widespread set of property rights. English judges did their best to reinforce the narrow rules of property possession in the common law courts, but the king was after all the king. He exercised a power to license long-continued occupation of land, a fact repeatedly acknowledged, but never directly addressed, in the common law. The practice was called color of title – found to be a practical rule of decision in many property disputes. It was the foundation of a whole realm of equity remedies that addressed practical realities that the common law could not. But even as the Court of Chancery applied equitable doctrines to property disputes, the common law courts insisted that no new property rules were to be imported into the common law. Color of title was simply another form of the king’s license, which acknowledged the pragmatic superiority of possession in resolving boundary disputes while denying that the law at issue was anything other than the king’s choice. It was never an independent title to property. Over the next two centuries color of title became entwined with new devices, especially the private conveyance and the canons of common law conveyancing. The canons were practical rules that took root in daily commercial practice and eventually became a body of rules that formed the substance of modern property law. They were celebrated in the 17th century by one commentator as "verbal traditions of the nice unity with which [the conveyancers] have preserved the ancient laws to posterity, as also the utility, and wonderful benefit that this unity hath brought into the nation." The rest of the world, of course, was living in the dark ages. Before the 14th century neither Scotland nor France, for example, had anything resembling the color of title. On the Continent, possession was worthless; only title mattered. Rather than state the same rules, the Continent’s commercial rules were suited to the foreign traveler of the day. Despite the desire of some commentators to the contrary, it is an unjustified leap of logic to equate color of title with adverse possession. Color of title made clear something that everyone intuitively understood – consistent occupation of property is important in establishing a right to it. Without color above title the accident of a landowner’s failure to occupy – and invest in – a portion of his property would prevent an adjoining owner from acquiring it through adverse possession. Today color of title continues to play an important role in our law, but seldom is it referred to as such. Its rationale lies behind our concepts of adverse possession, prescription and adverse use, all of which are so perfectly integrated that they have become the cornerstones of American thinking on the resolution of boundary disputes.
The Relevance of Color of Title in a Claim of Adverse Possession
Many cases interpreting adverse possession have held that, in order to establish entitlement to a deed from the state, an applicant must have color of title to the property. For example, in one case, the land at issue was described in a mortgage and a deed as the "South Half of Lot Two and the East Half of Lot Three" in a block, while the applicant actually possessed only the "North Half of Lot Two and the West Half of Lot Three." 2 Cal. Ap. 3d 1010 (1970). The court held: "While posession alone is not sufficient to give rise to adverse possession, the requirement of color of title can be dispensed with where the true owner has been put on notice of the claim to the land held by the claimant. . . . Where such notice has been accorded to the owner, even in the absence of color of title, his failure to supervise his land is, of itself, a sufficient circumstance to dispense with the requirement of color of title." Id. at 1015. (Quoting Russell v. Pomeroy, 72 Cal. 265, 267.) In dicta, the court in Roodsy v. IMG Worldwide Restaurants, LLC, 191 Cal. App. 4th 390, 397-398 (Cal. App. 4th Dist. 2010) noted that "[a] party seeking a deed to property from the state will have to show that he or she has color of title to the property," but whether Roods’ possession was under color of title was not an issue in that case. In Imbach v. Bonneville, 115 Cal. App. 2d 116, 118-119 (Cal. App. 2d Dist. 1952), petitioner had asserted a right to a deed from the state to the riverbed. While the trial court found petitioner had color of title by virtue of its deed from the state to the uplands, the appellate court, in remanding the issue back to the trial court, noted that "there are serious questions arising on the record as to whether under the [relevant statute] petitioners had color of title, but, as a general rule, color of title to an adjoining parcel not covered by water is sufficient basis for application for a deed to the accretions to the water-covered land. Whether petitioners had color of title to the land so as to meet the requirements for a deed to the accretions is a question which can only be determined upon a hearing of the issues." Id. at 118.
Color of Title v. Clear Title
Color of title is a deed or other instrument that is obviously defective on its face and would not cause a reasonably prudent person to inquire as to the status of its title. This term is associated with adverse possession. Color of title is not clear title. A clear title means the property is free from encumbrances, such as a lien, easement, or mortgage, that could hinder it from being sold to a willing buyer or that might prevent the owner from using the property as he or she wishes. A title search is used to determine the chain of title. After the search is completed, the owner can apply for ownership to be quieted, or confirmed as having clear title through a legal process. Such an action in court may be necessary if a judgment creditor has a lien on the property and your claim of ownership is made in spite of this judgment lien. If the judgment lien is more than five years old, the court may void it. Obtaining clear title especially can be important to banks that may be precluded from taking certain action if they cannot get marketable title to secure the property.
Color of Title Issues and Limitations
Not all color of titles are issues simply settled by paying taxes on the property for a statutory period of time. In some circumstances, the color of title may operate as a cloud or limitation on the property owner’s rights concerning the land or property. A color of title may exist that is fundamentally inconsistent with a party’s rights in the property; an example is where an individual holds both a fee simple title and a leasehold title to the same parcel of land. The result is a cloud on both interests. An obvious solution is to terminate one of the interests to clear the cloud, such as by assigning the lease interest to the person who holds the fee. The recognized remedy is a lawsuit, based on a theory of quiet title, to quiet the land use. The quiet title will effectively remove any uncertainty in the property interest as to its validity to the landowner.
Consider this example: Property owner holds legal title to vacant land purchased from someone else, but not the original owner. The named seller would have been the record owner at the time of the sale, but there are circumstances that make the seller’s interest in the property invalid. There was a wild deed issue, the seller conveyed the property named as land that it was not (it may have even been a mis-description), or it is later revealed that the seller had passed away prior to the sale or that the deed was never delivered. Assuming that the person who sold the property had sufficient claim of ownership at the time of sale, the possession of the property owner, coupled with the wild deed, may operate to establish title in the purchaser after a statutory period of time for adverse possession has passed. Examples of this can be seen in state common law , including Gayton v. Dandridge, 4 Whart 422 (Pa. 1839), and the Pennsylvania Superior Court case of In re Bickett, 155 A.2d 791 (Pa. 1959), both illustrating how ambiguity in the color of title can be ultimately resolved through quiet title actions.
In other circumstances, unintended consequences involving color of title may not be fully resolved through actions in quiet title. The case of Presbytery of New Jersey v. Hull, 199 N.J. 406 (2009), is one example of how color of title issues can arise in the context of nonprofit organizations and in the disposition of property by public entities. The issue in the case was based on a perceived failure to follow the presale requirements by the Municipality of Princeton that governed the sale of property. Such presale requirements dictate procedures that entities such as municipalities must follow to disclose to the public the sale property that it is intent on selling. The presale requirements in the statute must be followed or the sale of property will be deemed to be invalid. The purchaser in the case, Hull invested substantially in improvements to the real estate subject to the sale and attempted to use the color of title as an argument for validating the sale. Sadly, color of title may not have been enough to save Hull’s investment because the public interest in property sales was found to outweigh the purchaser’s private interest in making the sale valid. The Legislature responded by setting aside the presale requirements, but not the sale of property involved in that case. The color of title was simply not enough to save the purchaser’s investment.
Obtaining Title to Property by Color of Title
To protect a property right created by a color of title, the land should be dedicated to the burdened land as a whole and not to a specific parcel. There can be more than one color of title (for example, there may have been a first and second, perhaps even third, color of title). The burdened land does not have to be contiguous. Even a single color of title can burden non-contiguous parcels. However, the color of title must be described with particularity and it must be clear what land is intended.
There are several ways a property owner can protect his property right in land burdened by a color of title.
Reject or Severance of Color of Title A color of title can be rejected. It is possible to do this without having to file a quiet title action, for example, by moving material (like soil or peat moss) to the burdened land from your own land and removing the attached burden. Severance form property that is burdened by a color of title to amend or replace the color of title may involve filing a quiet title action as this is the most effective way to do so and evidences intent to sever the property from the benefits and burdens associated with the color of title.
Conveyance of Property Burdened by Color of Title A property owner may sell, give, or otherwise convey to another the property that is burdened by a color of title. The property owner remains the owner of the property, but the benefits, burdens, and rights that otherwise attach to the property because of the color of title, do not pass to the conveyance. In some instances, the new owner may immediately abandon the burden (if applicable) or commence a quiet title action confirming that his interest in the burdened land is limited to the benefit of the color of title.
Third-Party Conveyance of Property Burdened by Color of Title A third-party can convey or dedicate property that is burdened by a color of title to the burdened land. This is not usually effective unless it is absolutely clear that the third party did not intend to benefit from the dedication or conveyance and did not intend the burden as a result. A third-party can forcibly eviscerate their property burdened by a color of title and leave it with the land burdened by the color of title. In such case, the color of title becomes a nullity.
Abandonment of Color of Title Abandonment of the color of title can also sever a landowner’s property right in the land burdened by the color of title. Abandonment will apply only where there is an intent not to claim the color of title and the owner’s abandonment is without reservations.
Conclusion – The Meaning of Color of Title
In this article, we have explored the concept of color of title, its historical significance, and its persistence in modern property law. We began with a definition of color of title as it was initially understood as requirement at the common law, and discussed its evolution into a more broadly applied concept that remains relevant in areas such as adverse possession and tax foreclosure sales. We further examined the modern implications for attorneys, including the recent reforms to Michigan law discussed in the Michigan Tax Tribunal’s decision in In re Tax Foreclosure of 490 Lively Street, Ypsilanti Charter Twp, Case No. 19-000579-TT (August 14, 2019), and how Michigan courts have interpreted "color of title" in the lead case of Cooper v Brown, 286 Mich 571 (1938). We further explored the requirement to "scrutinize the deeds," as articulated in the Michigan Supreme Court’s 1978 decision in Herman v Michigan, 84 Mich App 725 (1978). In sum, we have examined how courts have navigated the complex ramifications of the color of title requirement , with its historical roots. We have also discussed how Michigan law applies color of title, and how it can play a pivotal role in obtaining the most favorable outcomes for clients facing tax foreclosure. Thus, while color of title is often considered an outdated concept, particularly in the realm of property description, the underlying principles still matter. Property rights continue to be held in the land records and taxes are assessed against the recorded owners of record so long as the land records are properly investigated. All real estate professionals can benefit from a better understanding of how various issues unfold at the intersection of these concepts. In conclusion, we emphasize the importance of consulting the land records and the law in order to avoid inaccurate assumptions about ownership and the adjournment of foreclosure sales. Only a full examination of the facts and data contained in the land records and the law can give the accurate assessment that can make the difference in realizing the greatest benefits for clients.