You’re excited to be selling your home. Or you found a fabulous house you want to buy. Then the closing attorney tells you there will be a delay because a “cloud” was found on the title.
You inevitably ask yourself, what is a cloud on the title?
A cloud on title is the term for a defect in the chain of ownership on a property. If there is a cloud, until it is fixed title underwriters will refuse to insure the new title. This typically means the seller can’t legally pass that title to the new buyer, and the buyer can’t own their new home.
South Florida real estate closing attorneys like me discover there is a cloud on the title when we do a title search after the contract is signed. Nobody likes when this happens, because unfortunately, it means the closing grinds to a halt for days, weeks, months, or even longer. During this delay, we work to fix the problem and have the cloud removed.
Here are 5 common causes for a cloud on your title, and how a real-estate attorney works to clear them:
- Recording error. One of the most basic errors happens when past sales of the property were improperly recorded in prior deeds stored at the courthouse. Faulty or incorrect wording on this crucial document that passes property from one owner to another can delay a sale. One of my clients once tried to sell her condo when it was discovered that incorrect numbers in the public records had her listed as owning the unit next door to the one she had purchased and lived in for many years! Sometimes the court will quickly recognize that the error is a simple typo which allows for a fast fix. Other times correcting the record involves tracking down prior owners and having them sign new paperwork to reconcile the issue.
- Liens. When you have a contractor or other vendor do work on your home, they can place a lien on the property if they are not paid in full. So, too, can the IRS if you have unpaid taxes. Releasing the lien typically involves having a real-estate attorney work with the property owner to reach an agreement with the lienholder(s). Occasionally, a lien will erroneously remain in the records even though all money due was paid long ago. This fix requires the holder of the lien to agree in writing that the lien will be removed. A similar problem to a lien: open permits on the property, started when the contractor began work but never closed, even if the job was completed. Ideally, the vendor will still be an operating business and the work performed well; in that case, a city or county inspection will declare the permit closed. If not, you may be required to have another contractor complete or inspect the work.
- At least one deceased owner. When people own a house together, even though the surviving person may get the house, he or she might legally do so only after the court agrees via probate (this depends on how they took the title of the house). When someone tries to sell a home with the deceased person still on the deed, everything must grind to a halt until the probate is done, which can take months or longer. With the popularity of living trusts, this also sometimes comes into play. I have a current client who has a living trust but the home wasn’t properly placed into the trust (unfortunately, a very common occurrence). After the owner died, the successor trustee prepared to sell the home but discovered he has to wait for the estate to go through probate.
- Foreclosure errors. Sometimes foreclosures cloud a title if the process hasn’t been precisely followed. This can mean it wasn’t described properly in foreclosure documents or there were other errors in this very precise process. These errors can be for a recent foreclosure, or for one that happened several owners ago but weren’t found before. Resolving this may mean submitting required paperwork or perhaps even reopening foreclosure proceedings to get an amended judgment.
- Fraud. One of the problems during the crazy real-estate runup in the early- to mid-2000s was fraud by unscrupulous actors, such as recording a forged deed. If the title has a break in ownership because of fraudulent activity, this can take a long time to legally resolve.
Have the Law Office of Gary M. Landau by your side. The Law Office of Gary Landau is located in Coral Springs, Florida, and is rated 10 out of 10 by the legal website AVVO. For more information or free phone consultation, call 954-979-6566 or email us. Attorney Gary Landau personally returns all calls to him.
Law Office of Gary M. Landau P.A.
7401 Wiles Road, Suite 204
Coral Springs, FL 33067
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