Cloud on Title

Cloud on title is a term referring to an apparent encumbrance on real estate property. Part of most real estate transactions is getting title insurance, which requires a thorough title search. During a title search, the researcher may uncover something that may impair or invalidate the transfer of title from seller to buyer. That circumstance is the cloud on title. Common problems uncovered in a title search include liens, old mortgages with no record of pay-off, an improper previous deed and an unresolved levy by a government agency. The seller of the property must clear up the clouds on title before the sale can go through. Doing so can mean settling liens and levies, getting a quitclaim signed or filing for a quiet deed. In some cases, the circumstances may prevent a sale from going through within the sales and purchase agreement time frame.