What does a cloud on title mean?

On Behalf of | Aug 16, 2022 | Residential Real Estate Transactions |

A title is a legal right to ownership of a property, including the right to sell. If there are doubts about the property’s ownership or third-party claims, its title is said to have a cloud.

As a result, it may be impossible to find buyers for your property since a cloud on the title stays with it even upon transfer. No one wants to buy a property whose ownership is unclear.

What could cause a cloud on a title?

Any unresolved issues regarding the property can cause a cloud on the title. For instance, if there are past or present ownership disputes that make the chain of title unclear, the title could be defective. This may happen during the probate process when due process is not followed.

Liens on a property could also cloud its tile. A lien is a legal claim against your asset as collateral to satisfy a debt. Some common liens include a mechanic’s lien, tax lien, or judgment lien. Unresolved liens can sum up to a tidy figure, and you may lose the property in extreme cases.

Fraudulent activities done with a property can also cloud the title.

What can you do about a cloud on a title?

Fortunately, you can resolve clouds of title and erase any doubts about the ownership of your property. Depending on the cloud on title, there are various ways of going about it.

Paying outstanding debts and using quit claim deeds are some ways you can clear defects on your title. However, you first need to know how to identify all existing clouds on your title. A clear title can save you a lot of headaches. Not only will you have peace of mind, but closing a sale will be a smooth process without unnecessary delays.