Cloudy title is one of those terms that you don’t hear much about until it happens to you. And when it happens to a buyer or a seller, it can quickly tank a sale right before it’s ready to go through. To protect yourself as either a buyer or a seller, it’s important to understand what a cloudy title is, how to keep yourself from having one, and what to do if you discover the house you want to buy or sell in Oklahoma City has a cloudy title.
WHAT IS A CLOUDY TITLE?
A cloudy title – also known as a cloud on title – is a document, lien, claim, or any other encumbrance that can invalidate or impair the title to a property, or that may make that title doubtful. A cloud on title typically occurs when there are unresolved issues regarding a property, such as foreclosure proceedings that were begun prior to a property being sold, or there might be liens from lenders or contracts to which the property owner agreed.
If the property’s seller didn’t pay for contracted construction or development work, the property also may have a mechanic’s lien. This type of lien stays in place until all labor and materials costs have been resolved, either by repayment of the debt or some other legal action.
In cases where a property was received by the seller in an estate or inheritance, probate issues also can cause a cloudy title. These issues arise if a property owner passed away without clearly defining who the property should go to, or if there are missing documents – such as death certificates – that throw ownership of the property into question.
Another, less common, situation that can cause a cloud on a title is fraud. If someone created a false deed that was recorded as a real one, it can throw into doubt who actually owns a property.
HOW CAN I PROTECT MYSELF FROM CLOUDY TITLE AS A SELLER In Oklahoma City?
If you’re selling a property in Oklahoma City, the best way to know whether or not you may have a cloud on your title is to have someone perform a title search prior to you listing the property for sale.
A title search, which is usually part of most standard home sales, can show you whether there are issues with the title of the property. Knowing about them before you’re in the midst of the sales process gives you enough time to clear up any issues by getting quitclaim deeds, paying outstanding debts, or pursuing other legal action.
Starting this process before you’re sitting with an offer on the table can save you a ton of time and frustration.
HOW CAN I PROTECT MYSELF FROM A CLOUDY TITLE AS A BUYER?
As a buyer, there isn’t much you can do to predict whether or not there will be issues with a cloudy title on properties you’re looking to purchase. Part of the sales process will be having a title search done on any properties you’re considering purchasing in Oklahoma City.
Sometimes, a cloudy title can be easily overcome by having the seller pay any money owed to a contractor, for example, or getting a quitclaim deed. However, not all situations are resolved this easily.
To protect yourself in the event of a cloudy title, don’t hinge all your property purchasing hopes on one single property. If you have any inclination there may be problems with the title to a property you’ve put an offer on, keep looking until you get the all-clear.
As a buyer in Oklahoma City, you are not liable for anything related to a cloudy title, but one certainly can derail your home purchasing plans without warning.
What Can Cause A Cloudy Title On A House In Oklahoma City?
A “cloudy” title refers to issues or complications with the ownership records of a property that can prevent a clear transfer of ownership. Here are 10 common reasons why a title on a house might be cloudy:
- Outstanding Liens: If there are unpaid debts, such as mortgages, tax liens, or mechanic’s liens, they can cloud the title until they’re resolved.
- Unresolved Inheritance Issues: If the property was inherited and the estate hasn’t been properly settled or if heirs have not formally transferred ownership, the title can be unclear.
- Errors in Public Records: Mistakes made in public property records, such as incorrect names, dates, or legal descriptions, can lead to discrepancies that cloud the title.
- Missing or Incorrect Wills: If a property owner died intestate (without a will) or if there are conflicting wills, it may be unclear who the rightful owner is, causing title issues.
- Forgery or Fraud: Instances of forged signatures or fraudulent transfers of ownership can lead to title disputes, making the property’s ownership unclear.
- Undisclosed Heirs: If an heir is not listed in the estate’s documentation, or if someone challenges the will, it may complicate the ownership and cloud the title.
- Boundary Disputes: Disagreements about the property’s boundaries or the existence of encroachments can lead to unclear title claims.
- Unpaid Property Taxes: If property taxes have not been paid or there are delinquent tax bills, tax authorities may place a lien on the property, affecting the title.
- Bankruptcy or Foreclosure: If the property was part of a foreclosure or bankruptcy case, unresolved legal claims could impact the title until they’re cleared.
- Shared Ownership: If the property has multiple co-owners (such as joint tenants or tenants in common), disputes or unclear agreements about ownership shares can create title issues.
Clearing up a cloudy title often requires legal intervention, such as working with a title company or attorney to resolve these issues before a sale can go through.
Can I Sell A House With A Cloudy Title In Oklahoma City?
Yes, you can technically sell a house with a cloudy title in Oklahoma City, but it can be more complicated. A cloudy title can cause delays or issues in the transaction process because it creates uncertainty about the ownership or legal status of the property. Here are some key considerations:
- Title Search and Title Insurance: When selling a property with a cloudy title, the buyer’s lender (if they are financing the purchase) will likely require a title search. The title company will identify any issues, and the buyer may refuse to proceed unless the title is cleared. Title insurance may also be harder to obtain for a property with a cloudy title.
- Clearing the Cloud: Before selling, you may need to clear the title by resolving any issues, such as unpaid liens, disputes over ownership, or errors in the public records. This might involve paying off debts, settling legal disputes, or correcting paperwork with the county.
- Cash Buyers: If you sell to a cash buyer or an investor, they may be more willing to purchase the property with a cloudy title, especially if they specialize in distressed properties or probate situations. However, they may offer less for the property due to the complications involved.
- Legal Assistance: To resolve a cloudy title, you may need the help of a real estate attorney or a title company to help clear the issues and ensure that the title is clear before the sale is completed.
- Disclosure: As a seller, it’s important to disclose any known issues with the title to potential buyers. Failure to do so could result in legal consequences.
In summary, while it’s possible to sell a house with a cloudy title in Oklahoma City, it typically requires resolving the title issues first or selling to a buyer willing to purchase the property “as is” with full knowledge of the complications.