American Land Title Association (ALTA) Practice Exam 2025 – Your Comprehensive All-in-One Guide to Success!

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What does the term "cloud on title" mean?

A decorative feature added to homes

A potential defect or problem with the title that may affect ownership rights

The term "cloud on title" refers to a potential defect or problem that may affect the legal ownership rights of a property. This concept is essential in real estate transactions because a cloud on the title can hinder the ability to sell or transfer ownership of the property. Such issues often arise from various sources, such as outstanding liens, disputes over property boundaries, or errors in public records.

Understanding this term is crucial for anyone involved in real estate to ensure clear and marketable title is obtained during transactions. Any cloud on title needs to be resolved before proceeding with a sale or refinancing to protect the interests of the owner and any potential buyers. This emphasizes the importance of thorough title searches and title insurance in real estate practices.

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Only issues related to environmental hazards

A metaphor for emotional distress from property ownership

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