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Why is there a cloud on my title?

On Behalf of | Feb 22, 2022 | Real Estate |

When you’re trying to sell property, one of the last things you’ll want to see if that there is a cloud on the title. If there is a cloud on your home’s title, it means that there is some kind of a problem that could impact the sale of the property.

A cloud can mean one of several things, but usually it’s indicative of an issue such as:

  • A mortgage lien
  • An error in the property’s address in a deed
  • A boundary dispute
  • An issue in probate
  • An ownership dispute

Basically put, a cloud on a title is a dispute or claim against the property. Unfortunately, since a cloud on the title could mean that another party has a right to claim ownership over the property, it may stop the sale of a property in its tracks. Title companies generally will not issue insurance until the cloud is removed.

You can remove clouds from titles

If the potential buyers haven’t backed out, it’s possible to take action and remove a cloud from the title to keep a sale. You have a few options, such as seeking a deed of reconveyance, quit claim deed or quiet title action.

A deed of reconveyance asks a lender to remove a lien because the mortgage has been paid off. A quit claim deed asks potential claimants to transfer their ownership interests to the new party, resolving ownership disputes. Quiet title actions are also possible and are a kind of civil lawsuit that settles ownership issues.

Of course, paying off liens or debts associated with the property will also help remove clouds associated with those issues.

Can someone buy a property with a clouded title?

Yes, they can, but they should know that there is a potential for a future ownership dispute. That’s why most people won’t agree to buy a property with a cloud on the title. It’s also difficult, if not impossible, to get financing on a property that doesn’t have a clear title. That’s something to keep in mind if buyers are looking at your property but clouds could impact their financing options.