What is meant by a Cloud on Title?
Your Ownership of your home or property free and clear of any mortgages, liens, or any interest in your property is known as title to you property. The condition of the title to your property concerns what interests, if any, other people may have in your property to use it, to have it held as collateral for a mortgage or other lien.
A cloud on the title to your property is any interest or lien of of any kind belonging to someone else of your property, particularly an interest for which you have no knowledge. It can also refer to any recorded document which may be a forgery, or which would cast doubt on whether you own the property from clear chain of title of previous owners, or whether your ownership can be divested.
How can I determine the condition of title to my property?
When a title company is hired to prepares for a closing of a real estate sale, it will search the records of the County Recorder to see what liens, mortgages, judgments, tax liens are recorded against the property. It will also search the County Courthouse for liens, unpaid property taxes, and the Bankruptcy Court to determine if any owner is in bankruptcy, which would automatically stop any sale until the Bankruptcy Court authorizes the sale, or until the Bankruptcy case is closed.
The title company does this search carefully because when closing takes place, the title company must thereafter issue a title insurance policy which insures that there are no mortgages or liens of any kind which could cloud the title to the buyer. If there is a cloud on the title to your property, you can file a claim on your title insurance policy to have it removed so you can sell or refinance your property, or stop a lienholder from foreclosing on your property.
Title insurance insures that the title company has done its job by paying off and removing all prior liens against your property when you purchase it. Mortgage companies hire title companies to search your property to insure that their mortgages are prior to any other liens.
Anyone can go the the County Recorder’s office to search title to his/her property. The County Recorder is the place where most records affecting title to your property are filed. Mortgage companies much record their Trust Deed or Mortgage to secure their mortgage loan. Judgment creditors record their judgments and Internal Revenue Service files their tax liens for delinquent taxes, all of which attach as liens to the debtors’ property.
What are common clouds that may be recorded against my property?
If you go to sell or refinance your property, a title company will issue a title report or a title commitment. This report will show liens which you may not have known about. The most common lien is a Trust Deed or a Mortgage which shows on title, but has been paid off, but which the mortgage company has not yet released. Title companies are generally the people who facilitate obtaining those releases without even your knowledge most of the time. Delinquent taxes or homeowner’s association liens are common.
What if I can’t sell or refinance my property because of an unpaid mortgage or lien, or I don’t have clear title?
In all likelihood you obtained a policy of title insurance when you purchased your home. This title policy should cover most liens and mortgages and unpaid taxes before you purchased your property. It will defend you against anyone claiming an ownership in your property. It will typically not protect you against someone claiming an easement or right to use the property. It will also not insure you against the power of local zoning agencies in most cases.
If you have a lien or problem with title to your property you did not expect, contact your title company who sold or refinanced your home. If you cannot get anyone to respond to you, call our office and we can review your situation with you. It is important that you do not wait until some events pass which may cause you to lose your rights in order to protect them.
What if I get notice that someone is foreclosing on my property for a mortgage or lien I know nothing about?
If someone is foreclosing on your property for a mortgage, Homeowners or Contractor’s lien or Judgment lien, you must take action right away. If you knew about the foreclosure and you delayed on filing a claim on your title insurance policy, you will likely be limited in what you can recover. Call our office if you are in any such situation. Don’t let any person commence foreclosure on your property without getting legal help at once.
What problems may arise if I deed my property to myself or to members of my family, or to a trust?
You may not know it, but you may be cutting off your title insurance policy if you deed your property to yourself, to yourself and your spouse, to a trust or to anyone else. If you use a quitclaim deed, the chain of warranties to title is broken, and your title insurance company may refuse to honor any claim of any prior lien or cloud to your title if any such problem arises. You should in most cases deed your property to members of your family using a Warranty Deed. When you have a doubt or question, be sure to get legal help.
Another serious problem arises if you deed your property via warranty deed or quitclaim deed to a member of your family who has a judgment lien or tax lien filed against him or her. Be sure you check to see that there are no such judgments or tax liens filed in the county records or with the courthouse, because the instant that your property is deeded to anyone with a judgment or tax lien against him or her, that judgment or tax lien instantly attaches to your property. Courts in most such cases will rule in favor of the lienholder. Call us for help before you make any such conveyance.
Call Us Before You Make Any Conveyance or Deed with your Home or Real Property.
We at Mountainland Title help people who have problems with title to property, or with a any situation involving title or title insurance. We can give you direction on what steps to take to resolve any problem with the title to your property before you make any conveyance. Call us at: