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Simple English definitions for legal terms
cloud on title (cloud)
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A quick definition of cloud on title (cloud):
Cloud on Title (Cloud): A problem with the ownership of a piece of land or property. This can happen if there is an old mortgage or debt that was not properly paid off, if someone did not transfer all of their rights to the property, or if there is some other issue with the history of ownership. This problem can be fixed by going to court or finding proof that the debt was paid off. If there is a cloud on the title, a company might not want to insure the property or might only insure it with certain conditions.
A more thorough explanation:
A cloud on title, also known as a cloud, is a claim on the ownership of a property that is either real or apparent. It can be an old mortgage or deed of trust that was not recorded properly, a failure to transfer all interests in the property to a former owner, an improperly written or signed previous deed, an unresolved legal debt or levy by a creditor or a taxing authority, or some other doubtful link in the chain of title.
For example, if a person sells a property to another person but forgets to transfer the mineral rights to the new owner, it creates a cloud on the title. The new owner may not have complete ownership of the property until the mineral rights are transferred.
Another example is if a previous owner had a mortgage on the property, but the mortgage was not recorded properly, and the debt was not paid off. This creates a cloud on the title, and the new owner may not have clear ownership of the property until the debt is paid off or the cloud is removed through a quiet title action.
To remove a cloud on title, a quiet title action may be necessary, or a person may need to create or execute a document to prove that a debt has been paid or corrected. Title companies will not insure title to be transferred with a cloud, or they will insure ownership except for the cloud.