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Color of Title in Illinois
Real Estate and Title Insurance News
by Brian Hair, ATG Law Clerk
Originally published in the January 2000 issue of the ATG concept.
Sometimes a bad instrument may be better than no instrument at all. Possession of a faulty or fraudulent instrument purporting to convey title may not mean good title, but it may be a ticket to ride on a shorter route than the route through adverse possession. Under certain circumstances a party may be deemed to own real property even if the deed or other purported evidence of title is defective and the statutory requirements for standard adverse possession have not been met. The requirements in Illinois for establishing ownership under these circumstances can be found in 735 ILCS 5/13-109 and 110, the so-called "color of title" statutes.
These sections are to an extent self-explanatory, and therefore, the statutory language is the proper starting point for this analysis. The first of these "color of title" sections, 735 ILCS 5/13-109, reads as follows:
Every person in the actual possession of lands or tenements, under claim and color of title, made in good faith, and who for seven successive years continues in such possession, and also, during such time, pays all taxes legally assessed on such lands or tenements, shall be held and adjudged to be the legal owner of such lands and tenements, to the extent and according to the purport of his or her paper title.
Section 13-110 uses similar language and applies essentially the same requirements to vacant and unoccupied lands that &§ 13-109 applies to lands and tenements actually possessed by the party claiming title under the statute. In other words, a party need not actually possess the property in order to gain ownership under color of title. Rather, it is only necessary that no one else occupies it and that the other requirements of &§ 13-110 have been met. However, &§ 13-110 also provides that a taxpayer cannot benefit from this section if any other party has better paper title to the vacant land than the taxpayer and that other party has paid the taxes for the land foranyof the seven years.
Some aspects of sections 109 and 110 require further elaboration. Fortunately, Illinois courts have interpreted these sections and their substantially similar predecessors repeatedly and at length. Some of the more crucial principles set out in that abundant case law follow.
First, it must be made clear that these sections hold out the promise of absolute ownership. If the requirements of the sections are met, then title is quieted completely and ownership is complete.Woods v Glos, 100 NE 516, 257 Ill 125 (1913). Indeed, "if the possession be invaded, even by the holder of the paramount title," the party benefiting from one of these sections can sue to recover what now belongs to him or her.Id.
In order to be the lucky beneficiary of either section, color of title must exist. So what exactly does "color of title" mean? In Illinois, color of title is a mere semblance of title passed by "[a]ny instrument having a grantor and grantee, and containing a description of the lands intended to be conveyed, and apt words for their conveyance…which purports to be a conveyance," but for some reason is not an actual conveyance.Brooks v Bruyn, 35 Ill 392 (1864).
Needless to say, color of title is far from perfect title.Payne v Markle, 89 Ill 66 (1878). Indeed, color of title is not even primarily a claim based on an instrument with defects that are mere technicalities or that cause the instrument to just barely fall short of being perfectly valid.Bergesen v Clauss, 155 NE 2d 20, 15 Ill 2d 337 (1958). Rather, it is primarily a claim based upon an instrument that is invalid - or even completely baseless - but whichappearsto be valid.Id.In fact, even aforgeddeed may act as color of title. As long as the recipient of the deed, unlike the forger, acted in good faith and the other statutory requirements are subsequently satisfied, the receipt of the forged deed acts as a first step toward ownership.Id.
It may seem odd that a recipient of a forged instrument could satisfy the requirements of these sections, given that the sections require the color of title to be "made in good faith." However, the good faith requirement applies to the recipient of the color of title, not to the grantor.Id. What's more, the courts have interpreted this good faith requirement liberally. The party claiming ownership under one of the sections is presumed to be acting in good faith. To overcome this, evidence of actual fraud or bad faith must be shown.Gochenour v Logsdon, 30 NE2d 666, 375 Ill 139 (1940). Further, this evidentiary showing is not easy. For example, even if the party has notice of defects in the title or notice of an adverse claim, this is not sufficient to show a lack of good faith.Richards v Carter, 66 NE 343, 201 Ill 165 (1903). All that matters is that the party actually believes the title is good.
Moreover, color of title need not even be based on a deed, and it need not be based on money consideration.Baldwin v Ratcliff, 17 NE 794, 125 Ill 376 (1888). The statutory language requires some kind of "paper title" - i.e., a writing - but this paper title can be any instrument intended to "pass a title to lands, of which a description is given, from one party to another."Id., citingMcCagg v Heacock, 34 Ill 479 (1864). Therefore, color of title can be passed by an auditor's deed made upon a tax sale, by a mortgage and decree of strict foreclosure, by a judgment in a partition proceeding, or by a will, to name a few examples.Id., citingWoodward v Blanchard, 16 Ill 434;Chickering v Failes, 26 Ill 519;Hassett v Ridgely, 49 Ill 201;McConnell v McConnell, 64 N.C. 342.
However, color of title cannot be based on a mere contract or bond for a deed.Rigor v Frye, 62 Ill 507 (1872). The instrument must purport on its face to actually convey title; it is not enough that it entitle one to an instrument of conveyance in the future.Id. In short, although the sections are flexible in that the type of instrument involved need only purport to pass title to described property from one party to another party, they are not flexible enough to extend to a mere promise or option to convey.
Another requirement of these sections is that the party desiring to benefit from them must pay the taxes for the property. Taxes must be paid for an uninterrupted seven years, concurrent with the color of title, and in the case of &§ 13-109, concurrent with possession of the property.Beard v Henn, 190 NE 2d 345, 28 Ill 2d 11 (1963). Because of this requirement, a party cannot acquire title under these sections to any land that is not subject to taxation. Therefore, in the case of such tax-exempt property, the party must wait the full twenty years required for standard adverse possession.Illinois Cent R Co v Cavins, 87 NE 371, 238 Ill 380 (1909).
As stated above, &§ 13-109 covers situations in which the taxpayer under color of title possesses the lands, while &§ 13-110 covers situations in which he or she has color of title to lands that are vacant. However, even under &§ 13-110, the taxpayer must at some point after the seven years take possession of the lands in order to assert the claim.Anderson v Village Homebuilders, 81 NE 2d 430, 401 Ill 60 (1948). If someone having a better paper title takes possession first, then the taxpayer attempting to benefit from this section is out of luck.Wylie v Fisher, 169 NE 237, 337 Ill 488 (1929).
Whether it is during the seven-year period that taxes are being paid under &§ 13-109, or subsequent to the seven-year period that taxes are being paid under &§ 13-110, possession must be adverse to the owner.Dunlavy v Lowrie, 25 NE 2d 67, 372 Ill 622 (1939). Also, in order to satisfy &§ 13-109, the possession must be continuous and uninterrupted for the entire seven-year period.Burns v Edwards, 45 NE 113, 163 Ill 494 (1896).
Finally, it is important to be aware that in order to benefit from either &§ 13-109 or &§ 13-110, one must satisfy the requirements of one of the sections completely and cannot combine them or tack partial performance of either of them onto partial performance of the other.White v Harris, 206 Ill 584, 69 NE 519 (1903). For instance, a taxpayer cannot become the owner of property that he or she possesses for the first three years that he or she pays taxes, but which then becomes vacant for the next four years. It must be either vacant for the full statutory seven-year period or possessed by the taxpayer for the full seven-year period.
This has been just a brief overview of the "color of title" statutes. It is important to understand how these sections operate. They allow parties with no legal right to ownership to obtain absolute ownership in a relatively short period of time compared to standard adverse possession requirements. It also gives that party the legal right to convey absolute ownership. The flip side of this is that legal ownership can also be lost in a short time by a non-observant, non-taxpaying, legal owner who is not in possession.
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Posted on: Mon, 01/17/2000 - 8:28am