In real estate parlance, "clear title" means that the property owner has a valid, defect-free title to the real estate in question. A "cloud on title" occurs when there is a defect with the title, such as:
Having clear title is so important in real estate matters because property cannot be sold or transferred unless there is a clear title on hand. An imperfect title, or any defects could negate a transfer or transaction.
An encumbrance means that there is some sort of hindrance on the title that needs to be taken care of before it is sold. An example of this is an easement, which would grant passerby the right to walk through the property. This basically affects the ownership rights and control of the property, and needs to be addressed before the property is sold.
Another example of an encumbrance is a mortgage or any other loan that is being enforced on the property. Tax liens and other issues with debt can create an encumbrance on the property.
If there is a dispute regarding the status of a title to property, the proper procedure is to undergo a quiet title proceeding with the court. This is an official proceeding that investigates the title to the property and attempts to resolve any issues such as defects or encumbrances.
Here, the judge may look to the history and transactions related the property in order to clarify or "quiet" the title. In addition, a thorough search with the county recorder’s office can help reveal whether there are any issues with records for previous owners. Once the title is cleared, the parties can proceed with a sales transaction.
Dealing with real estate transactions can involve some detailed legal concepts. You may need to hire a real estate lawyer for help with issues such as clearing titles and searching records. Your attorney will be able to assist you with your questions, and can also provide you with legal representation if you need to take legal action.
Last Modified: 08-17-2015 05:59 PM PDTLaw Library Disclaimer
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