Which statement about encumbrances and marketable title is accurate?

Which statement about encumbrances and marketable title is accurate?

• A. The title is free from encumbrances that would adversely affect the purchaser's use unless disclosed.
• B. The title must be free from any encumbrance always, even if undisclosed.
• C. The title's encumbrances must be created by the grantee.
• D. The title has no restrictions on use.

Answer: (A)

Marketable title means a title a reasonable buyer would accept, free from encumbrances that would adversely affect use or value, unless those encumbrances are disclosed. This captures the idea that some encumbrances can exist if they are known to the buyer and properly disclosed, so they aren’t defects that render title unmarketable. The statement is the best because it recognizes that disclosure allows a buyer to assess and decide whether to accept the encumbrance or seek removal or insurance. The other options are inaccurate: encumbrances don’t have to be absent entirely if they’re disclosed; encumbrances can be created by someone other than the grantee; and a title can have use restrictions like easements or covenants and still be marketable if those restrictions are disclosed or otherwise handled.

Marketable title means a title a reasonable buyer would accept, free from encumbrances that would adversely affect use or value, unless those encumbrances are disclosed. This captures the idea that some encumbrances can exist if they are known to the buyer and properly disclosed, so they aren’t defects that render title unmarketable. The statement is the best because it recognizes that disclosure allows a buyer to assess and decide whether to accept the encumbrance or seek removal or insurance. The other options are inaccurate: encumbrances don’t have to be absent entirely if they’re disclosed; encumbrances can be created by someone other than the grantee; and a title can have use restrictions like easements or covenants and still be marketable if those restrictions are disclosed or otherwise handled.