Cloud on Title
An outstanding claim or encumbrance which, if valid, would affect or impair the title of the owner of a particular estate.
Detailed Definition
A cloud on title is a recorded or asserted claim that, if it turned out to be valid, would impair an owner's title. The BLM Glossary of Surveying and Mapping Terms defines it as "An outstanding claim or encumbrance which, if valid, would affect or impair the title of the owner of a particular estate," and adds that "A mortgage judgment or tax levy may in some cases constitute a cloud on title."
The key words are "if valid." A cloud is a doubt. It may be groundless, satisfied long ago, or legally dead, but as long as it sits in the record unanswered, the owner cannot show clean title.
Common sources of clouds
- A mortgage or lien that was paid but never released of record
- A deed with a defective description, signature, or acknowledgment
- An heir of a former owner who never conveyed
- A recorded document that asserts an interest the maker never had
- A reservation or exception whose meaning is unclear
A statutory remedy for false recordings (Arizona)
Some states provide remedies aimed at recorded documents that should not be there. Under A.R.S. 33-420(A), a person who records a document claiming an interest, lien, or encumbrance "knowing or having reason to know that the document is forged or groundless, contains a material misstatement or false claim or is otherwise invalid" is liable to the owner "for the sum of at least $5,000 or for treble the actual damages caused by the recording, whichever is greater." Subsection B lets the owner bring a special action "to immediately clear title to the real property." Other states have different remedies or none of this kind.
Clouds involving mining claims
- County records can carry notices of location for mining claims that are no longer in effect. BLM's brochure says a mining claim for which the fee or waiver is not filed by September 1 is "forfeited by operation of law," and nothing in that rule requires a filing in the county. The brochure also says a claimant who abandons a mining claim "should file a notice" with the county and BLM, which is advice, not a requirement.
- A recorded location notice is not proof of a valid mining claim. As the Ninth Circuit put it, in a passage quoted in Congressional Research Service report R48166, "having a piece of paper reflecting that one has unpatented mining claims does not show that one actually has valid unpatented mining claims."
How clouds are removed
A release from the lienholder, a quitclaim deed from the person holding the apparent interest (see Quitclaim Deed), a corrective instrument, or a court judgment in a quiet title action (see Quiet Title Action).
Why it matters in mineral title research
- Each cloud has to be identified, traced to its source, and classed as either a real outstanding interest or a doubt that needs curative work (see Curative).
- On mining claim ground, the county record and the BLM case file have to be read together. Either one alone can make a dead mining claim look alive.
Related Terms
Chain of Title
The series of conveyances affecting a tract, arranged in order from the government or other original source of title down to the present holder.
Title Opinion
A written legal opinion on the ownership of land or minerals, based on the record, that identifies the owners, the exceptions and defects found, and the steps needed to cure them.
Curative
The work of correcting defects and gaps in title identified in a title opinion or title report, by obtaining and recording documents, filings, or court orders.
Abstract of Title
A condensed history of the title to land, summarizing every conveyance affecting it together with the liens, charges, and liabilities to which it may be subject.
Encumbrance
A right to or interest in land held by someone other than the owner that makes the land subject to a charge or liability, such as a mortgage, lien, lease, or tax.
Quiet Title Action
A lawsuit in which a party claiming an interest in land brings in anyone asserting an adverse claim, so the court can decide the claims and bar the losers from asserting them again.