What is a title defect or “cloud” on title?

A cloud on title is any unresolved issue that could undermine the owner’s clear right to the property. Common examples include an old mortgage that was paid but never released, a contractor’s or tax lien, an error in a previously recorded deed, a boundary discrepancy, or an heir who was never accounted for in a prior transfer. Clouds don’t necessarily mean a deal can’t happen. Most are resolved through payoffs, corrective documents, or releases. The title company’s job is to identify and clear them before closing so you receive marketable, insurable title.