A cloud on title is defined as an actual or apparent outstanding claim on the title to real property. "Clouds" can include old mortgages or deeds of trust with no recording showing the secured debt was paid off, a failure to properly transfer all interests in the real property (such as mineral rights) to a former owner, a previous deed which was improperly written or signed, an unresolved legal debt or levy by a creditor or a taxing authority, or some other doubtful link in the chain of title.
A few examples of clouds on title are:
Insufficient Deed:The form and/or content of a deed are insufficient to actually convey the property. This may result in the conveyance being nullified.
Marriage: A single person is selling or mortgaging property, but the title search reveals there are two persons on the deed and it says they are married.
Death: The children of a widowed woman, who is now deceased, mortgaged the property, but the title search reveals there is no recorded will or deed from the decedent's estate to these children.
Money liens: A man who had purchased the property before marriage thereafter mortgaged the property. He then gets married. Florida recognizes a spouse's interest in this property if it is classified as homestead property.
Mechanic's lien: An owner fails to pay the contractor who built the pool in the backyard. This contractor can place a lien on the property for his/her unpaid labor.
Tax liens: The owner failed to pay his/her taxes and a certificate was sold in the amount of the unpaid taxes.
Often the "cloud on title" can be removed by the institution of a quiet title action, by the execution and recordation of a valid deed, or by the recordation of a document proving a debt has been paid. If you do not know the cloud on title exists, you purchase the property subject to this cloud.