Real Estate Term of the Day: Clear Title & Cloud on the Title
CLEAR TITLE – a marketable title; one free of clouds and disputed interests (Barron’s Dictionary of Real Estate Terms)
CLOUD ON THE TITLE – an outstanding claim or encumbrance that, if valid, would affect or impair the owner’s title (to the property) (Barron’s Dictionary of Real Estate Terms)
Title companies will not insure any title to be transferred if there is a cloud on the title. They will, however, work with the owner to identify those claims or encumbrances that need to be cleared in order to properly insure the transferor the property to the buyer from the seller. The most common encumbrances are: outstanding mortgage loans, unpaid taxes, easements, mechanics liens, HOA liens, tax liens, judgments and deed restrictions. How do I know if my property has any encumbrances or clouds on title? An O&E report provided by your local title company will help you identify these items. Furthermore, the Colorado Division of Insurance defines the O&E report as: the “Ownership and encumbrance report (“O&E”) means information identifying the last recorded owner, legal description and recorded deeds of trust or mortgages of a particular real property address available from public records.”
See also: Land Title’s Technical Bulletin for clearing voluntary liens and involuntary liens
LESLIE MONACO REAL ESTATE 