Once a buyer and seller have made a deal, once the seller has signed an agreement to sell a home, a flurry of activity is set into motion. The buyer has certain activities to pursue, such as getting a property inspection to determine if the home has any serious defects and applying for a mortgage loan. And the seller has completely different activities to pursue, probably the most important of which is to assure his buyer that he can provide clear title to the property at the time of closing.
If that last sentence wasn't completely understandable, you're not alone. I know people in the real estate business who might give me a blank stare if I asked them to explain the terms "clear title" and "cloud on title." Let me put it this way; it takes a while to understand that the idea of clear title isn't always clear!
And reading a real estate or legal dictionary won't necessarily help you much, either. That's where you'll find "cloud on title" defined as "any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property." OK, how's that for a clear explanation? Doesn't help much when you simply need to sell a home, does it? Here's my simple explanation of both terms, based on my thirty years of real estate experience, and you won't find it in any dictionary, but you may find it works for you. A piece of land has a life of its own. And during the recorded lifetime of a piece of property, from the time it was sectioned-off by the US Government and used as agricultural land, or marked-off into lots for houses, it has its own unique history.
Every person or group that has owned a piece of land has been recorded in the county records in which the piece of property is located. And any person or group that ever recorded a financial claim on that property, or - and here is the big, irritating thing that most people don't know or want to know - that includes people who have never been involved with the piece of property at all - can come back and claim a financial interest in that piece of property. They can, quite literally and legally, interrupt a sale transaction. That includes your transaction.
So, immediately upon signing an agreement to sell a home, every seller has to use a lawyer or a title company for the purpose of conducting a "title search, " meaning the county records are scoured for any people or groups who might have leftover or "outstanding" interests in the property. The likelihood that anyone will show up and interrupt your transaction is very slim, but you know how lawyers are, they have to go through everything with a fine-tooth comb, looking for potential problems, just in case. Clear title means that the lawyers found no clouds on title and your property is good to go. You can sell a home and no claimants can interrupt your sale transaction. The lawyer or title company provides a "title opinion" and you've done your part as a seller to get your sale closed. Congratulations!
If that last sentence wasn't completely understandable, you're not alone. I know people in the real estate business who might give me a blank stare if I asked them to explain the terms "clear title" and "cloud on title." Let me put it this way; it takes a while to understand that the idea of clear title isn't always clear!
And reading a real estate or legal dictionary won't necessarily help you much, either. That's where you'll find "cloud on title" defined as "any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property." OK, how's that for a clear explanation? Doesn't help much when you simply need to sell a home, does it? Here's my simple explanation of both terms, based on my thirty years of real estate experience, and you won't find it in any dictionary, but you may find it works for you. A piece of land has a life of its own. And during the recorded lifetime of a piece of property, from the time it was sectioned-off by the US Government and used as agricultural land, or marked-off into lots for houses, it has its own unique history.
Every person or group that has owned a piece of land has been recorded in the county records in which the piece of property is located. And any person or group that ever recorded a financial claim on that property, or - and here is the big, irritating thing that most people don't know or want to know - that includes people who have never been involved with the piece of property at all - can come back and claim a financial interest in that piece of property. They can, quite literally and legally, interrupt a sale transaction. That includes your transaction.
So, immediately upon signing an agreement to sell a home, every seller has to use a lawyer or a title company for the purpose of conducting a "title search, " meaning the county records are scoured for any people or groups who might have leftover or "outstanding" interests in the property. The likelihood that anyone will show up and interrupt your transaction is very slim, but you know how lawyers are, they have to go through everything with a fine-tooth comb, looking for potential problems, just in case. Clear title means that the lawyers found no clouds on title and your property is good to go. You can sell a home and no claimants can interrupt your sale transaction. The lawyer or title company provides a "title opinion" and you've done your part as a seller to get your sale closed. Congratulations!