Uncovering and Correcting Title Clouds
Sometimes in the process of a title search, title clouds may be discovered. A title cloud is when there may be a question or doubt regarding the seller's property ownership rights. If the seller's right to own the property is not clear, the seller may not have full legal authority to sell the property or transfer ownership to you. When we take care of a real estate closing at Lake of the Ozarks for our clients, we are not just there to make sure one party gets paid and the other party receives keys to the house. We are responsible for ensuring the legal ownership of the property and transferring the complete ownership of that property from the seller to the buyer. Many title clouds are correctable; however, some are not. If you are curious about title clouds and what to do about them, we have answers for you in this blog.
Title clouds can also be referred to as title defects. Technically, the title to your house is what actually proves the legal right of the homeowner to own the property. A cloud, simply put, indicates there is a question as to who owns the home, whether there are restrictions on how the property can be used, or if a liability exists for the potential buyer. Clouds can be related to actions or liabilities connected to the current owner, and clouds can also exist because of questionable history regarding the property that has nothing to do with the current owner. Either way, those clouds must be resolved before clear title can be issued.
When we do a title search at Lake of the Ozarks, there are a few common examples of title defects that we see come up. Unpaid liens are a common, but easily solvable cloud. They can be placed on the property because of unpaid taxes, a mechanics lien for work that has been done on the house, or any loan where the home was used for collateral. Fraud and forgery can create discrepancies on who is the owner, as well can errors in public records. If the property is involved in any kind of legal action such as foreclosure or a lawsuit regarding the ownership, that is also considered a title defect. In addition, a title cloud can occur if the property is in probate. When a homeowner does not designate who will inherit the home in their will, ownership is not clear until settled in court.
What Can Be Done
The first thing is to have a trusted title company at Lake of the Ozarks look at every defect and determine whether or not it is correctable. Some title defects are complicated and costly. Others are easily correctable. The most important thing is to know about them before you make a large investment. That is why having an experienced title company is so important. Having a thorough title search and being issued a title insurance policy to protect your ownership rights can give you peace of mind and a team of experts in your corner should something unknown come up after you’ve closed on the purchase of your home.
If you have any questions about title defects, Arrowhead Title has been conducting real estate closings at the lake since 1984 and we have the expertise to help. Reach out to us anytime you are in need of title, escrow, and closing services at the Lake of the Ozarks. If you would like to hear more tips and information about the real estate market like the Ozarks, we invite you to follow us on social media. We have our links below for your convenience.