Investor's wiki

Cloud on Title

Cloud on Title

What is cloud on title?

A cloud on title is any unsettled claim, lien or other encumbrance on a property that might keep transfer of ownership starting with one party then onto the next. Cloud on title notes that there is question connected with the condition of the title deed that must be settled or cleared before transfer can happen.

More profound definition

At the point when a mortgage is taken out on a property, the mortgage holder will take a lien over the property. This means that the owner can't sell the property without clearing the title. Liens can likewise be placed over a title for different reasons, and these incorporate IRS liens and legal decisions connected with the property. In such conditions, it is outside the realm of possibilities for transfer of title to occur in light of the fact that there is cloud on title.
At the point when this occurs, the seller has three options:

  • Sort out for the lien to be lifted by paying off the debt.
  • Cancel the sale.
  • Start a quiet title claim to clear the lien or encumbrance.

Few out of every odd cloud on title influences transfer of ownership. At the point when land is partitioned, the engineer might record conditions and limitations that apply to that land. Additionally, there might be zoning requirements and recorded easements for services, for example, power lines. These don't influence the transfer of the title. Nonetheless, purchasers ought to be made aware of these easements and conditions since they could influence how the property is utilized. Thus, purchasers ought to be careful of signing a purchase contract that is subject to easements of record and all easements must be documented on the title.

Cloud on title model

Jim purchased a property from an estate. During the title search, the agent found that an old mortgage was registered against the property, dating back 45 years. Realizing that this cloud on title was in all likelihood a clerical mistake, the agent started an action to quiet title. This proved that the mortgage had, as a matter of fact, been paid off and closed, yet for reasons unknown the documentation was not as expected handled. Following the fruitful quiet title action, Jim had the option to continue and the sale was closed.


  • Clouds on the title are settled through a quitclaim deed.
  • A cloud on title is any encumbrance that puts a title to real property into question.
  • Instances of encumbrances are foreclosure procedures, liens on a property, probate, or fraudulent titles.