The term cloud on title refers to a deed (title to real
property) which has been recorded but includes an unusual
characteristic that would give a reasonable person pause before
accepting title. Oftentimes, the presence of a cloud on title
provides the grantee the option to back out of a contract.
Examples of cloud on title can include a property's address
being misspelled in a deed conveying title, a mortgage lien
whose repayment hasn't been officially recorded, a deed which
has been signed but hasn't been properly recorded, or a failure
to transfer property rights (such as mineral rights) to a
former owner of the property. A cloud on title is generally
considered synonymous with a title defect.