What Is A Cloudy Title?

10/09/2024 12:34 PM Mark Goodman

Clouds provide us with rain and shade, but a froth of clouds is probably the last thing you want to see if you’re headed to the beach for the day. These clouds get in the way of your beautiful sunny skies and can be a bit frustrating, and that sentiment is why you’ll sometimes hear the term “cloudy title” during a commercial acquisition. It’s also why you should work with a title clearing service to help clear up any of these clouds prior to the purchase of your new property. Below, we take a closer look at cloudy titles in commercial real estate, and we explain how you can resolve them prior to making a major financial purchase.

Clouds On A Title

Much like clouds on a sunny day, a cloudy title oftentimes references some minor or mild issues with a title. After all, the presence of clouds on an otherwise gorgeous day won’t ruin your day, but in a perfect world, these clouds would clear, just like you’ll want to do in order to ensure there are no issues with the title of the property you are working to acquire.

Types of issues that can cloud a title include:

Easements
Liens
Encroachments
Chain of Title Issues

Let’s use a couple of examples to help paint this picture further. Let’s say you are working to acquire a commercial property from a woman whose husband has previously passed. During the sale, you notice that both the husband and wife are named on the deed, and obviously his signature is not present. This is a small cloud that could be cleared up with some verbiage stating that the woman is the surviving spouse of the other named party on the deed.

A more serious cloud would be something like if a survey of a property that you’re considering purchasing revealed that part of a building actually encroaches onto the neighbor’s property. This isn’t something that can be cleared up with some verbiage on the deed, and you may need to work with a title clearing company to address the encroachment as you and the neighbor see fit.

Clouds get in the way of a clear title, and you do not want to buy a cloudy title, because then it is your problem to deal with. It may not seem like a major deal at the time, but clouds on a title can significantly impact the value of your property or require costly litigation to resolve, further affecting your finances. Instead of taking on a cloudy title, work with a company like Commercial Partners to resolve these clouds so that you can have peace of mind.

Let the team at Commercial Partners clear those skies and ensure that the sun shines down on your clean title prior to closing. For more information on cloudy titles or how to resolve a title issue prior to a property acquisition, reach out to the team at Commercial Partners today at (612) 337-2470.