DEFINITION of 'Cloud On Title'
Any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property or make the title doubtful. Clouds on title are usually discovered during a title search. Clouds on title are resolved through initiating a quitclaim deed or a commencement of action to quiet title.
BREAKING DOWN 'Cloud On Title'
A title search and title insurance are generally required by lenders as protection from any third-party claims, or clouds on title, to property that is used as collateral. Title searches and title insurance are required in the mortgage origination process.