Also known as:cloud on title · clouds title · clouded title · clouding the title
Written by attorneys · grounded in primary & secondary sources — see below
A claim or encumbrance against real property that creates reasonable doubt as to ownership. Title defects that produce this result include unreleased liens, breaks in the chain of title, outstanding interests such as easements or covenants, and pending litigation asserting adverse claims.
Sources & Authorities
How it applies
Common Examples
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Quiet Title Action Blocks Closing
Cedar Creek Farms contracted to sell a campus to Colin Chambers for use by several charities. The contract required delivery of marketable title and provided a short cure period. Before closing a quiet title suit by heirs asserted a reversionary interest in one building, and Cedar Creek Farms admitted it could not resolve the suit in time. Colin Chambers refused to close, and the court denied specific performance because the unresolved litigation created a cloud on title that rendered it unmarketable.
Prejudgment Attachment Clouds Sale
Christopher Collins obtained a prejudgment attachment on Chloe Chen's commercial lot to secure a contract claim. The recorded attachment prevented Chloe Chen from conveying clear title to a buyer who needed financing. Because the attachment remained of record and exposed any purchaser to litigation risk, the buyer refused to close until the attachment was lifted after a prompt hearing.
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Common Law
Course Outlines
Connecticut v. Doehr501 U.S. 1 (1991)
Common questions
Frequently Asked
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What kinds of defects commonly cloud title and render it unmarketable?+
Unreleased liens, breaks or ambiguities in the chain of title, outstanding interests such as easements or covenants, and pending litigation that asserts an adverse claim all create clouds on title. A reasonable buyer would refuse to accept title subject to any of these defects because each exposes the buyer to litigation risk or loss of part of the property.
Supporting sources
When may a buyer refuse to close because of a cloud on title?+
A buyer may refuse to close and may rescind or resist specific performance when the seller cannot cure the cloud by the closing date or within any contractual cure period. The buyer need not wait until the scheduled closing if the seller has already refused or is unable to remove the defect.
Supporting sources
Does a forged deed in the chain of title create a cloud that justifies refusal to close?+
Yes. A forged deed is void and creates a serious ongoing risk that a prior true owner could assert an adverse claim. That risk renders title unmarketable even if the forgery is decades old and no litigation is pending.
Supporting sources
Is a recorded option agreement that cannot be released a cloud on title?+
Yes. A recorded option that grants repurchase rights to an unlocatable holder creates reasonable doubt about clear ownership of part of the property. Because the defect cannot be cured within the contract period, the buyer may refuse to close.
Supporting sources
501 U.S. 1 (1991)Constitutional Law
…that the property interests that attachment affects are significant. For a property owner like Doehr, attachment ordinarily clouds title; impairs the ability to sell or otherwise alienate the property; taints any credit rating; reduces the chance of obtaining a home equity loan or additional mortgage; and can even place an…