Clouds, Claims And Defects,
What Is A Cloud On Title, Or Title Defect?
A cloud on title is a phrase used, primarily by lawyers, to refer collectively to any of the types of title defects that a a title search can uncover. These include any encumbrances that could interfere with a clean transfer of title from seller to buyer.
A cloud on title in real estate includes the following types of issues:
Liens
Easements
Court proceedings
Past claims on the title
It’s important to spot these issues as soon as possible because many of them can negatively impact the property. If you’re attempting to sell the home, a cloud on title can devalue your property and make it more difficult to sell. And if you’re the buyer, an unresolved title defect could force you out of the transaction.
What Kinds Of Problems Constitute Clouds, Or Defects?
Tax Liens
Easements
Mechanic's Liens
Old unpaid mortgage
Unpaid HOA fees
Probate
Lawsuits
Claims on Title
Divorce
The Bottom Line: Clouds On Title Will Dissipate Once The Title Defects Are Resolved