Question 79

Undischarged mortgage may become a cloud on a title.

An undischarged mortgage can create a cloud on a title as it indicates that there is still an outstanding debt secured by the property, which can complicate ownership and transfer of title.

A) Deed restriction

A deed restriction is a limitation placed on property use, but it does not interfere with the ownership rights or create a cloud on the title in the same way that a mortgage does. It is generally enforceable but does not represent a competing claim against ownership.

B) External obsolescence

External obsolescence refers to a loss in property value due to external factors, such as economic downturns or neighborhood decline. While it can affect property value, it does not constitute a legal claim against the property title and therefore cannot create a cloud on the title.

C) Zoning variance

A zoning variance is an official permission to deviate from current zoning requirements. While it affects how property can be used, it does not represent a competing financial interest or claim against the title, thus it does not create a cloud on the title.

D) Undischarged mortgage

An undischarged mortgage indicates that there is still a lien on the property due to an outstanding loan. This represents a financial claim that can affect ownership and transferability, thereby creating a cloud on the title, as it complicates clear ownership.

Conclusion

The undischarged mortgage is definitively the correct answer as it represents a direct legal claim against the property that can obstruct clear ownership. In contrast, the other options, while they may impact the property in various ways, do not create legal claims that cloud the title. Thus, they do not fulfill the criteria for what constitutes a cloud on a title.