Which concept is described as 'Free of defects and unreasonable risk of litigation'?

Which concept is described as 'Free of defects and unreasonable risk of litigation'?

• A. Adverse Possession (Prop)
• B. Marketable Title (Prop)
• C. Implied Warranty of Fitness (Prop)
• D. Warranty of Habitability (Prop)

Answer: (B)

The concept being tested is marketable title. Marketable title means the owner’s title can be transferred to a buyer without significant defects that would subject the buyer to litigation or financial loss. In practice, this means the title is free from encumbrances, liens, or other hidden claims, and there is a clear chain of title that a prudent buyer would accept. A title that might expose the buyer to lawsuits or unexpected costs—such as unresolved liens, undisclosed encumbrances, or disputed ownership—would not be marketable. Lenders and title insurers often require marketable title to proceed with a closing. Adverse possession describes obtaining ownership through long, open, and continuous possession, not the quality of the title itself. Implied warranties of fitness or habitability relate to the quality and suitability of the property rather than the title’s defect risk.

The concept being tested is marketable title. Marketable title means the owner’s title can be transferred to a buyer without significant defects that would subject the buyer to litigation or financial loss. In practice, this means the title is free from encumbrances, liens, or other hidden claims, and there is a clear chain of title that a prudent buyer would accept. A title that might expose the buyer to lawsuits or unexpected costs—such as unresolved liens, undisclosed encumbrances, or disputed ownership—would not be marketable. Lenders and title insurers often require marketable title to proceed with a closing.

Adverse possession describes obtaining ownership through long, open, and continuous possession, not the quality of the title itself. Implied warranties of fitness or habitability relate to the quality and suitability of the property rather than the title’s defect risk.