Marketable title must be free of undisclosed defects and encumbrances. Which statement about this is true?

Marketable title must be free of undisclosed defects and encumbrances. Which statement about this is true?

• A. It must be free of undisclosed defects and encumbrances.
• B. It must be guaranteed by a title certificate.
• C. It requires no due diligence by the buyer.
• D. It is evidenced solely by a deed.

Answer: (A)

Marketable title means the seller can transfer ownership without reasonable doubt about the validity of the title. The true statement is that the title must be free of undisclosed defects and encumbrances, because hidden liens, undisclosed easements, or other hidden problems create clouds on the title and would make it unmarketable to a prudent buyer. Title searches and title insurance exist to identify and address these issues, and while some encumbrances may exist if they’re fully disclosed and will be resolved or insured at closing, the defining point is that there are no undisclosed defects or encumbrances. A title certificate isn’t something that’s universally guaranteed by law, and due diligence is still expected of the buyer; a deed alone does not prove marketability since it does not address potential title defects.

Marketable title means the seller can transfer ownership without reasonable doubt about the validity of the title. The true statement is that the title must be free of undisclosed defects and encumbrances, because hidden liens, undisclosed easements, or other hidden problems create clouds on the title and would make it unmarketable to a prudent buyer. Title searches and title insurance exist to identify and address these issues, and while some encumbrances may exist if they’re fully disclosed and will be resolved or insured at closing, the defining point is that there are no undisclosed defects or encumbrances. A title certificate isn’t something that’s universally guaranteed by law, and due diligence is still expected of the buyer; a deed alone does not prove marketability since it does not address potential title defects.