Escrow & Title
In Illinois, 'cloud on title' refers to:
AAn incomplete property description in a deed
BAny outstanding claim, encumbrance, or defect that affects or impairs the marketability of title✓ Correct
CA dispute between neighbors over a boundary line
DThe use of a land trust that obscures the beneficiary's identity
Explanation
A cloud on title is any document, lien, claim, or encumbrance in the chain of title that may be invalid or unenforceable but appears to affect the property owner's rights. Examples include old mortgages never formally released, disputed easements, tax liens, or mechanic's liens. Clouds on title must typically be resolved (through quiet title actions or recorded releases) before a clear title can be conveyed. Title insurance protects buyers against unknown clouds.
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