Legal Dictionary & Glossary

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CLOUD ON TITLE (CLOUD)

A claim, or encumbrance on real Property that affects or impairs the title. Examples of cloud on title incude: a mortgage lien whose repayment hasn't been officially recorded; a deed which has been signed but hasn't been properly recorded; a mechanic's lien, or a construction lien, another word if a renovation work was performed on the house and was not paid, a contractor or a subcontractor may record their interest in the Property until their work is paid.; an address of the parcel is misspelled; there is discrepancy in the actual footage of the house and footage recorded.

As the seller of the Property has to deliver it with the clear and marketable title the presence of a cloud on title provides the buyer an option to back out of a contract

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