What Is A Clear Title And A Cloud On Title?

After the buyer and seller make a deal, as soon as the owner signs a purchase agreement to sell a house, a whole chain of activity begins. There are certain activities the buyer must pursue, getting a property inspection and applying for a mortgage loan are a couple examples. The seller has different activities, and the most important is providing the buyer with assurance that the title to the property is free and clear.

Lots of people are confused about what is meant by "clear title." Honestly, there are lots of people in the real estate business who wouldn't be too comfortable if you asked them to explain "clear title" and "cloud on title." It actually takes a while to grasp that the idea of clear title isn't very clear!

Feel free to look up the terms in a legal or real estate dictionary and see what you find. You'll see "cloud on title" defined as "any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property." Oh boy, how's that for a crystal clear explanation? Doesn't help much when you want to understand how to sell a house, does it? So I'm going to write out my explanation of both terms, based on many, many years of real estate experience. You won't find this explanation in any kind of dictionary, but you may find it works to help you understand a little better.

Basically, land has a life of its own, and all the activity that involves every piece of land is recorded in records of the county where the land is located. From the time it was sectioned-off by the Federal Government or marked-off into lots for houses each piece of land has its own unique history. Every owner and every person or group having recorded a financial claim on a piece of property is listed in the county records as well. Depending on the nature of the financial claims, and whether those claims were released property, people who have never been involved with a particular piece of property can, quite literally and legally, interrupt a sale transaction. It's true, and that includes your own property transaction.

Sellers are required to hire a lawyer or a title company to conduct a title search, meaning the county records are scoured for any people or groups having unresolved financial interests in the property. Although it's not likely that anybody will show up to interfere with your transaction, you know how lawyers are, they have to assume the worst, just in case. When a property has clear title it means that lawyers found no clouds on the title, no potential claimants, and then you can sell your house with no problems. You can sell a house without fear of interference with your transaction. Your lawyer or title company provides you with a title opinion and you've done your part to assure all parties to the transaction that title to the property is clear. Congratulations!


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Leo Kingston has been buying and selling homes in the Oklahoma City area for nearly 3 decades. His company, 18002sellhomes, offers house owners in the OKC area a method to sell a home quickly for cash without the need of a Realtors services.