Property Ownership
In Montana, a buyer's title examination should include checking for 'clouds on title.' A 'cloud on title' refers to:
AWeather-related title insurance provisions
BAny claim, lien, encumbrance, or irregularity that may cast doubt on the validity or marketability of the title✓ Correct
CA policy endorsement for storm damage
DAerial survey markers affecting boundaries
Explanation
A cloud on title is any condition in the title chain that may impair or cast doubt on the owner's clear title—such as an old unsatisfied mortgage, an unresolved judgment, a potential heir's claim, or a gap in the chain of title. It must be resolved before title can be considered marketable.
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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.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
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