Escrow & TitleIntermediateAlaska Exam

A 'cloud on title' is best described as:

AAny outstanding mortgage on the property
BA claim, lien, or encumbrance that may impair the owner's clear titleCorrect
CThe difference between assessed value and market value
DAn expired easement that no longer affects the property, in most cases

Why A claim, lien, or encumbrance that may impair the owner's clear title Is Correct

Answer B: A claim, lien, or encumbrance that may impair the owner's clear title

A cloud on title is any claim, lien, encumbrance, or question about the title that may impair the owner's ability to convey clear title. Clouds can include unsatisfied judgments, unreleased mortgages, disputed boundary lines, and forged deeds.

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

Deed

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

Easement

A non-possessory right to use another person's land for a specific purpose.

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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