Escrow & Title
In New Mexico, the term 'cloud on title' refers to:
AWeather-related damage disclosed in the title report
BAny claim, lien, encumbrance, or other instrument that may impair the owner's clear title or make title unmarketable✓ Correct
CA dispute between adjacent landowners
DA title insurance exception
Explanation
A cloud on title is any document, claim, or encumbrance that raises a question about the validity or clarity of the owner's title — such as an old unresolved lien, a forged deed in the chain, or a boundary dispute. Clouds must typically be resolved before a sale can close.
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