The term “cloud on title” has to do with property law and is the name of an issue that appears when there is an outstanding legal issue that affects ownership of a particular property. This legal issue is known as a cloud on title and it can stop a person or entity from transferring ownership of a property. It provides an impediment to the sale or transfer of the property until the issue has been cleared.
Example of a Cloud on Title
A common example of a cloud on title is when there is a lien or mortgage on the property. Until the lien or mortgage is satisfied, the ownership of the property cannot be transferred or sold. This would create a cloud on title, as the legal issue has to be cleared up before the transfer of ownership can take place.
How to Remove a Cloud on Title
The way to remove a cloud on title is to address the issue that initially created it. For example, if there is a mortgage on the property, the mortgages must be paid off first before the transfer of ownership can occur. Once the legal issue has been resolved, the cloud on title is gone.
Conclusion: What Does ‘Cloud on Title’ Mean?
In short, a cloud on title is a legal issue affecting ownership of a property. It keeps the property from being transferred or sold until the issue has been resolved and, as a result, creates a cloud on title. The only way to remove the cloud on title is to resolve the legal issue that created it.