Cloud on Title - Definition
Written by Jason Gordon
Updated at December 17th, 2020
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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 aCloud 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.asphttps://en.wikipedia.org/wiki/Cloud_on_titlewww.businessdictionary.com/definition/cloud-on-title.htmlhttps://legal-dictionary.thefreedictionary.com/Cloud+on+Titlehttps://www.yourdictionary.com/cloud-on-title