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Cloud on Title – Definition

Cloud on Title Definition

A cloud on title is a claim, encumbrance or lien hat makes the title of a property contestable or disputable. When there is an outstanding lien or claim on a property, the title roi the real property cannot be ascertained, hence, the lien or claim is a cloud on title. Clouds on title are often associated with real estate such as buildings, lands and other properties. Every homebuyer and real estate agent must do a thorough check of the property to be transacted to avoid the purchase of a real estate that has cloud on title.

A Little More on What is Cloud on Title

Generally, clouds on title impair the title of real property, it makes an individual’s claim to the property invalid and disputable. A cloud on title is also referred to as title defect, it describes uncertainties and irregularities associated to a real estate title. Real estate agents or homebuyers can detect a cloud on title during a title search, since title search is an important requirement for mortgage loan. Hence, in every real estate transaction a title search must be dome of all properties to ensure there are no existing claims, liens or encumbrances on the property.

Types of Issues That Can Cause a Cloud on Title

There are several issues that can cause a cloud on the title of a property, the major issues are;

  • An existing issue over who the actual owner of the property is, especially when there is an existence of a false deed which is legally questionable.
  • Foreclosure proceedings on the property due to defaults in payments.
  • Liens placed on the properties of delinquent borrowers.
  • Inheritance issues between heirs to real estate properties can also create a cloud on title.
  • Problems with the repayment of loan taken for the reconstruction or rehabilitation of the property.
  • Fraudulent activities previously done with a property can cause a cloud on title.

To resolve a cloud on title, the concerned parties are required to start an action to quiet title or initiate a quitclaim deed.

Reference for “Cloud on Title”

https://www.investopedia.com/terms/c/cloud_on_title.asp

https://en.wikipedia.org/wiki/Cloud_on_title

www.businessdictionary.com/definition/cloud-on-title.html

https://legal-dictionary.thefreedictionary.com/Cloud+on+Title

https://www.yourdictionary.com/cloud-on-title

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