What are Title Clouds and What Can Be Done About Them
When we conduct a real estate closing at the Lake of the Ozarks, our job is not just to oversee the handing over of the keys to the house. We are there to make sure the actual legal ownership of the property officially and completely transfers from the seller(s) to the buyer(s). If there is any question or limitation on the seller’s right to own the property, the buyer may not be get the full ownership they expect. Whenever there is a doubt or question as to the property’s ownership, it creates what is called a title cloud. If you would like to learn more about clouds and what can be done about them, keep reading!
A cloud on title is also known as a title defect. The title to your house is the document that proves the homeowner has the legal right to own the property. When there is a cloud on the title it indicates there is some question on who owns the home, whether they are free to use the property as they wish, or if there is some liability for the potential buyer. This can be a discrepancy regarding the current owner or something questionable about the history of the property prior to the current owner that has been left unresolved.
Here are some of the more typical examples of clouds on titles that we see when doing a title search at Lake of the Ozarks:
An unpaid lien on a property is a good example. It can be unpaid taxes, a loan where the house is used as collateral, a mechanic’s lien for work done on the house … until the lien is paid off, it will create a cloud on the title. Probate can also cause a title cloud. If the late homeowner did not designate in their will who would inherit the home, ownership is unclear. If the home is in foreclosure or involved in a law suit regarding ownership, the title will be clouded. Recording errors in public records can also cause clouds and must be corrected to ensure ownership rights. In addition, fraud and forgery can cause discrepancies on ownership of a property.
Finding a cloud during a title search at the Lake of the Ozarks can be a huge problem, or not. The main thing is knowing about them before you buy the property, and having a title insurance policy to protect your ownership rights should something unknown arise after the purchase. That is why it is so important to have a reputable title company at the Lake of the Ozarks complete a full title search and provide you a full report. Often, at Arrowhead Title, when we discover a title cloud we are able to simply resolve it. It may be as easy as paying off a debt that was overlooked (or properly recording it as paid), or obtaining a missing signature. However, some clouds can be very costly and time consuming to correct. For that reason, any clouds can be problematic to a buyer or lender and can cause them to walk away from the sale.
Having a professional title company on your side can make all the difference when it comes to title clouds. Receiving a title report early in the process and knowing exactly what it means allows you make an informed decision on whether to purchase the property. Clearing title clouds BEFORE you go to the closing table and purchasing a title insurance policy can give you peace of mind and security as you make the long awaited decision to buy a home at the Lake of the Ozarks. We want that experience to be everything you hope for. When you are ready to buy or sell real estateat the Lake of the Ozarks, give Arrowhead Title a call … because we know accuracy really does matter!