Cloud on title

Any document, claim, unreleased lien, or encumbrance that may superficially impair or injure the title to a property or make the title doubtful because of its apparent or possible validity. Clouds on title are usually uncovered in a Title Search. These clouds range from a recorded mortgage paid in full, but with no satisfaction of mortgage recorded, to a property sold without a spouse's release of interest, to an heir of a prior owner with a questionable claim to the property. The property owner may initiate a quitclaim deed or a quiet title proceeding to remove the cloud on title from the record. Also called bad title.

An outstanding claim or Encumbrance that, if valid, would affect or impair the owner's Title. Compare Clear Title.
Example: Abel dies and in his will leaves land to Baker. Abel's widow is contesting the validity of Abel's will. During this period there is a cloud on Baker's title to the land.

An apparent claim or encumbrance, such as a lien, that, if true, impairs the right of the owner to transfer his or her property free and clear of the interests of any other party.

The existence of a cloud on title casts doubt upon the ability of an owner of real property to convey marketable title to his or her land, thereby lessening its value. The owner must present evidence to dispel the cloud on title if he or she wants to transfer ownership free of legal uncertainty. One method to remove a cloud on title is the commencement of an action to quiet title.

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The term cloud on title refers to a deed (title to real property) which has been recorded but includes an unusual characteristic that would give a reasonable person pause before accepting title. Often, the presence of a cloud on title provides the grantee the option to back out of a contract. Examples of cloud on title can include a property's address being misspelled in a deed conveying title, a mortgage lien whose repayment hasn't been officially recorded, a deed which has been signed but hasn't been properly recorded, or a failure to transfer property rights (such as mineral rights) to a former owner of the property. A cloud on title is generally considered synonymous with a title defect.

See also

• Aval
• Continuando
• Bare trust

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