What does a cloud on title refer to?

A cloud on title refers to an outstanding claim or encumbrance that affects the ownership or marketability of a property. This term is commonly used in real estate to indicate that there may be issues concerning the title that could potentially challenge or dispute the rights of the property owner. Such claims might stem from previous liens, judgments, or disputes regarding the property's ownership history.

When a cloud on title exists, it complicates transactions like sales or refinancing, as potential buyers or lenders may be wary of these encumbrances and how they could affect their interests. The resolution of a cloud on title typically requires legal action or negotiation to clear the claim, thereby restoring the title to its clear and marketable state.

The other options represent concepts related to property ownership but do not accurately describe the nature of a cloud on title. A clear ownership of property, the absence of liens, or a confirmation of property rights would indicate a situation where there are no challenges to the title, which is opposite to what a cloud on title signifies.