Escrow & TitleIntermediateAlabama Exam

In a title search, a 'cloud on title' refers to:

AA property with an ocean view, subject to the usual exceptions

BAny document, claim, or encumbrance that may impair the titleCorrect

CA property in a flood zone

DA title with no encumbrances

Why Any document, claim, or encumbrance that may impair the title Is Correct

Answer B: Any document, claim, or encumbrance that may impair the title

A cloud on title is any document, claim, lien, or encumbrance that casts doubt on the validity of the title and may need to be resolved before the property can be sold.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

Key Escrow & Title Terms in This Question

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

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Key Terms to Know

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Abstract of Title

A condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

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