What describes a title transfer that is defective in a way that is unknown to the new owner?

The correct term for a title transfer that is defective in a way that is unknown to the new owner is known as "cloud." A cloud on title refers to any claim, lien, or encumbrance that affects the condition of the title and may cause uncertainty or potential disputes regarding ownership rights. This could include defects that the new owner is unaware of at the time of purchase, such as outstanding liens, claims from other parties, or other obstacles that could impact ownership.

Understanding the concept of a cloud on title is crucial, particularly for individuals involved in real estate transactions, as it emphasizes the importance of thorough title searches and ensuring that a title is free from defects prior to the transfer of ownership. This knowledge assists buyers in recognizing the potential risks associated with their investments and encourages diligence in verifying the legal standing of the property before completing a purchase.