Buying or selling a home is a significant and exciting financial decision. But it comes with a fair share of paperwork and legal steps, including a search of public records by your title company to verify who legally owns a property.

Sometimes, there is a ‘cloud’ on title that must be cleared before the property can be transferred. A cloud on a title is any claim that could challenge the ownership rights of the current owner, including legal disputes or errors in the property records.

Common clouds on title may arise from:

• Liens and encumbrances — Including outstanding mortgages, unpaid taxes, judgments, or other claims against the property
• Incorrect or missing information on title — This can include mistakes in the legal description of the property or errors in the chain of ownership
• Boundary disputes — If there is a dispute over the location of property lines, it can affect ownership rights and create title issues
• Forged or fraudulent documents — This can include forged deeds, releases, or other legal documents
• Unrecorded easements or rights-of-way — These are rights granted to someone to use a portion of the property for a specific purpose, such as a utility company having a right-of-way across the property.

Clearing a cloud on title can be as simple as paying off any unpaid taxes or liens, or correcting mistakes in the public record. But sometimes they need to be cleared by:

• Quiet title actions – Legal proceedings that can remove someone from a property title if they do not have legal ownership rights
• Deeds of reconveyance – Documents that transfer a property title from a lender to someone else
• Quitclaim deeds – Documents that transfer a property title from one person to another, such as someone who does not have rights to own land to someone who does.

For protection against future claims that may arise after the title is deemed clear, buying title insurance is the surest way to reduce liability for the new owner.

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This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice. The material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. Intended for distribution to only one per individual for marketing purposes only on behalf of our company. Not for reproduction.