Is There A Cloud On Your Title?

If you know anything about real estate, you know that there is a lot more to buying and selling property than simply handing over the keys. There are multiple steps that must be taken and quite a bit of paperwork that must be filled out before ownership can be transferred from one party to another. Typically these steps can be taken without too much trouble, but every once in a while, issues may arise that inhibit the sale of a property. A "cloud" is an example of one such issue.

What Is "Cloud On Title"?

Often considered synonymous with "title defect," the term "cloud on title" refers to any issue with a title that may cause a reasonable buyer to hesitate before purchasing the property. Examples of common clouds include (but are not limited to):
  • Unpaid property taxes
  • An unsatisfied mortgage lien
  • A pending lawsuit over ownership of the property
  • An improperly recorded deed
  • An improperly recorded easement
  • Improperly recorded ownership
  • Any outstanding lien or other encumbrance

What Happens If There Is A Cloud On Title?

Before property can be purchased or sold, a professional title company will conduct a title search to uncover any potential issues that may hinder the sale process. If a cloud is discovered, steps must typically be taken to resolve it before the sale can commence. Sometimes these issues can be resolved easily. For example, the sellers may have the funds needed to pay off an outstanding lien or your title professional may be able to help you obtain a needed signature to clear the encumbrance. If on the other hand the solution is not so readily accessible, the title issues may be addressed by filing a "quiet title" action.

In some cases, the buyers may choose to back out of a sale once a title defect is revealed. In these instances, the real estate contracts are typically allowed to expire and the title defects are left unresolved. These unresolved title defects can significantly reduce property value.

What Is A Quiet Title Action?

A quiet title action is a lawsuit that is intended to "quiet" the issues that a title may present. It can be used to resolve property disputes, establish the rightful owner of a property, and resolve other issues that may threaten right to ownership of a property. Once the current ownership is clearly defined and other claims have been satisfied, the property can be sold.

Can Property Be Sold Without Filing A Quiet Title Action?

In some instances, conveyance of a title may be possible without filing a quiet title action. However, this often presents a risk for the buyers. Generally, title companies will either not issue an insurance policy for a defective title or they will "insure around" the defect. That is, the insurance policy will only cover issues relating to unknown hazards that may arise at a later date. In these instances, the buyers have to front the costs of issues relating to the defect on their own, as they will not be covered under the policy.

Contact Arrowhead Title, Inc. For More Information!

Uncovering a title defect may create unexpected challenges in your transaction process, but our title experts in Lake Ozark MO will be here to help make the process go more smoothly. For more information about our title services at the Lake of the Ozarks, visit our website at

The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!

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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 65049


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