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Handling a cloud on the title of an investment property

| Apr 13, 2021 | Real Estate Transactions |

Illinois real estate transactions are often complicated even when documentation is in order. However, if there is an outstanding claim or encumbrance on a property you wish to purchase, you could face a long-term dispute that derails your project indefinitely. Lengthy negotiations may result in controversy regarding the deed, title right of way and a wide range of other property issues.

According to the Illinois General Assembly, a cloud on title means there is a dispute regarding ownership or title of a specific piece of property. If you have property with an unresolved claim, lien or other legal judgment, you cannot sell it until you clear the title. If the title has an encumbrance, you have three options. You can pay off the debt, lifting the lien, cancel the sale or bring a quiet title lawsuit.

What is a quiet title suit?

A conflict of ownership can occur when several parties have a claim or interest in the title. Often referred to as “clouds,” all claims must be clear of outside defects before the title can become marketable. A quiet title lawsuit can also resolve issues, including the following:

  • Easement concerns, such as a shared driveway
  • Deed errors
  • Results from incorrect surveys that cause questions regarding boundaries
  • Removing previous ownership claims after an estate sale or probate

Quiet title actions often occur after the purchase of property in a tax deed sale. While the sale generally overrides previous liens, the claim remains on the title. You can remove it through title certification or file a quiet title action.

What are the requirements for a quiet title?

A quiet title claim often occurs when the property is part of a commercial development project. Complaints must list all entities or individuals claiming an interest in the property before bringing the suit. Documentation must include the legal description of the property, address or common designation and facts of the adverse possession. Depending on the situation, you may also need the date as of which you seek the determination.