Cloud on title
Encyclopedia
The term cloud on title refers to any irregularity in the chain of title
of property (usually real property
) that would give a reasonable person pause before accepting a conveyance of title. A cloud on title reduces the value and marketability of property because any prospective buyer aware of the cloud will know that they are buying the risk the grantor may not be able to convey good title. Often, the discovery of a cloud on title will provide the grantee a reason to back out of a contract for the sale of real property.
Examples of clouds on title 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, an easement that has not been properly recorded, unpaid property taxes, a failure to transfer property rights (such as mineral rights) to a former owner of the property, and a pending lawsuit before a court of law over ownership to the property. A cloud on title is generally considered synonymous with a title defect.
The usual remedy for a cloud on title is to file a civil action to quiet title
.
Title (property)
Title is a legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or an equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document that serves as evidence of ownership...
of property (usually real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
) that would give a reasonable person pause before accepting a conveyance of title. A cloud on title reduces the value and marketability of property because any prospective buyer aware of the cloud will know that they are buying the risk the grantor may not be able to convey good title. Often, the discovery of a cloud on title will provide the grantee a reason to back out of a contract for the sale of real property.
Examples of clouds on title include a property's address being misspelled in a deed
Deed
A deed is any legal instrument in writing which passes, or affirms or confirms something which passes, an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions sealed...
conveying title, a mortgage lien
Lien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation...
whose repayment hasn't been officially recorded, a deed which has been signed but hasn't been properly recorded, an easement that has not been properly recorded, unpaid property taxes, a failure to transfer property rights (such as mineral rights) to a former owner of the property, and a pending lawsuit before a court of law over ownership to the property. A cloud on title is generally considered synonymous with a title defect.
The usual remedy for a cloud on title is to file a civil action to quiet title
Quiet title
An action to quiet title is a lawsuit brought in a court having jurisdiction over land disputes, in order to establish a party's title to real property against anyone and everyone, and thus "quiet" any challenges or claims to the title....
.