Bar Exam (Uniform) Quiz: Title Defects

20 questions · exam conditions

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Title DefectsQuestion 1 of 20

You are representing a buyer of an apartment building. The contract requires marketable title. Your due diligence reveals that the seller has a month-to-month lease with a tenant for one of the apartments. The tenant is properly in possession. The contract for sale makes no mention of the tenant or the lease. Your client intends to continue renting out the apartments after purchase.

What is the legal status of the seller's title? Select one.

The title is marketable because the lease is a month-to-month tenancy that can be terminated on short notice.

The title is marketable because the buyer's intention to continue renting the apartments means the lease is not an adverse encumbrance.

The title is unmarketable only if the tenant refuses to sign a new lease with the buyer after the closing.

The title is unmarketable because the existing lease is an encumbrance that was not provided for in the contract.

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Bar Exam (Uniform) Quiz

Bar Exam (Uniform) Quiz: Title Defects

Practice Title Defects in Bar Exam (Uniform) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Title Defects, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Uniform).

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

What is the legal status of the seller's title? Select one.

The title is marketable because the lease is a month-to-month tenancy that can be terminated on short notice.
The title is marketable because the buyer's intention to continue renting the apartments means the lease is not an adverse encumbrance.
The title is unmarketable only if the tenant refuses to sign a new lease with the buyer after the closing.
The title is unmarketable because the existing lease is an encumbrance that was not provided for in the contract. (correct answer)

Explanation: When you encounter a real estate question about marketable title, focus on whether any encumbrances exist that weren't addressed in the contract. Marketable title means title that's free from reasonable doubt and can be sold to a reasonably prudent buyer without litigation risk. The correct answer is D because an existing lease creates an encumbrance on the property that affects the buyer's rights. Even though the contract doesn't mention the lease, this doesn't eliminate its legal effect. The tenant has possessory rights that will transfer with the property, limiting the new owner's immediate control. Since the contract requires marketable title but doesn't account for this encumbrance, the title is unmarketable. Answer A is wrong because the duration or terminability of the lease doesn't eliminate its status as an encumbrance. A month-to-month tenancy still grants the tenant legal rights that encumber the property until properly terminated. Answer B incorrectly suggests that the buyer's future intentions affect the title's marketability. Marketable title is determined objectively based on existing encumbrances, not the buyer's subjective plans or preferences. Answer C is incorrect because the tenant's willingness to sign a new lease is irrelevant to the current title's marketability. The existing lease already creates an encumbrance, and the title's status is determined at the time of the title examination, not based on future contingencies. Remember: Any existing lease or tenancy creates an encumbrance that affects marketable title unless specifically addressed in the sales contract. The buyer's intentions don't cure title defects.

Question 2

A landowner obtained a permit and built a guesthouse on his property in full compliance with all zoning laws at the time. Ten years later, the city 'downzoned' the area, changing the zoning to prohibit accessory dwelling units. The landowner's guesthouse became a legal nonconforming use. The landowner has now contracted to sell the property to a buyer. The contract requires marketable title. The buyer is concerned that if the guesthouse is ever destroyed by fire, the city's ordinance would prohibit him from rebuilding it.

Does the zoning ordinance, which prevents the rebuilding of the legal nonconforming use, render the seller's title unmarketable? Select one.

Yes, because the restriction on rebuilding significantly impairs the value of the property and amounts to an encumbrance.
Yes, because the buyer would not be able to use the property in the same manner as the seller if the guesthouse were destroyed.
No, because the mere existence of a zoning ordinance and its potential future impact does not constitute a title defect. (correct answer)
No, because the guesthouse is a legal nonconforming use, which means there is no current violation of the ordinance.

Explanation: The correct answer is C. The covenant of marketable title protects a buyer from defects in the seller's title and existing encumbrances. It does not protect against government regulations, such as zoning ordinances, that may restrict the future use of the property, provided there is no existing violation. Here, the guesthouse is a legal nonconforming use, so there is no current violation. The ordinance's potential future effect (prohibiting rebuilding) is a legal risk related to land use regulation, not a cloud on the title itself. A buyer is expected to investigate and be satisfied with the current zoning regulations before purchasing. A and B are incorrect because impairment of value or use due to a valid, non-violated governmental regulation is not a title marketability issue. D is correct that there is no current violation, and C provides the broader, more complete reason why this does not create a title defect.

Question 3

A buyer entered into a contract to purchase a house from a seller. The contract provides for conveyance of a fee simple absolute, with marketable title to be delivered at closing. A survey conducted by the buyer reveals that the seller's swimming pool and a portion of the attached deck encroach by three feet onto the neighboring property. The neighbor has not complained about the encroachment, which has existed for five years. The jurisdiction's statutory period for adverse possession is 15 years.

Which of the following statements most accurately describes the status of the seller's title? Select one.

The title is marketable because the encroachment is minor and does not substantially affect the value of the property.
The title is marketable because the neighbor has implicitly consented to the encroachment by not complaining for five years.
The title is unmarketable because the encroachment exposes the buyer to a risk of a forced removal and litigation. (correct answer)
The title is unmarketable only if the neighbor formally objects to the encroachment before the closing date.

Explanation: The correct answer is C. An encroachment of a structure onto a neighboring property constitutes a title defect that renders the seller's title unmarketable. This is because the buyer would be exposed to the risk of litigation from the neighbor, who could seek damages or an injunction forcing the removal of the encroaching structure. The buyer is not required to accept such a risk. A is incorrect because even a seemingly minor encroachment can lead to litigation, making title unmarketable; there is no widely accepted 'de minimis' exception. B is incorrect because the neighbor's silence does not constitute legal consent or waiver of their property rights, especially since the time period is far short of that required for adverse possession or an easement by prescription. D is incorrect because the marketability of title is determined by the existence of the defect and the associated risk of litigation, not by whether a formal objection has yet been made.

Question 4

You are representing a buyer who has contracted to purchase a vacant lot for the purpose of building a hardware store. The contract requires the seller to deliver marketable title. The property is subject to a local zoning ordinance that permits commercial development, including retail stores. However, your title search uncovers a declaration of covenants recorded by the original developer of the subdivision 30 years ago, which restricts all lots in the subdivision to 'single-family residential use only.'

What is the strongest basis for your client to claim the seller's title is unmarketable? Select one.

The zoning ordinance and the private covenant are in conflict, creating a legal uncertainty that must be resolved before closing.
The existence of the restrictive covenant frustrates the buyer's intended use of the property, creating a title defect. (correct answer)
The covenant is a government regulation that limits the use of the property, which is a per se violation of marketability.
The seller failed to disclose the existence of the covenant, which constitutes a fraudulent misrepresentation.

Explanation: The correct answer is B. A private restrictive covenant is an encumbrance on title. If a covenant restricts the owner's ability to use the property for its intended and zoned purpose, it renders the title unmarketable. Here, the covenant for 'single-family residential use' directly prohibits the buyer's plan to build a hardware store. This frustration of the buyer's purpose is a classic example of an encumbrance that makes title unmarketable. A is incorrect because there is no legal uncertainty to resolve; a landowner must comply with both zoning and private covenants, and the more restrictive of the two controls. Here, the covenant is more restrictive. C is incorrect because a private covenant is not a government regulation; the mere existence of a zoning law is not a title defect, but a private covenant is. D is incorrect because failure to disclose may be a separate claim, but the core title issue is marketability, which does not depend on the seller's state of mind or disclosures.

Question 5

A seller acquired title to a parcel of land through a tax foreclosure sale conducted by the county. The seller then entered into a contract to sell the land to a buyer, promising to deliver marketable title. The buyer's attorney investigated the tax sale proceedings and found that the county had failed to provide proper notice to a recorded judgment lienholder before the sale. The statute of limitations for the lienholder to challenge the tax sale has not yet expired.

The buyer wants to rescind the contract, claiming the title is unmarketable. Is the buyer likely to prevail? Select one.

Yes, because the procedural defect in the tax sale creates a significant risk that the sale could be voided, subjecting the buyer to litigation. (correct answer)
Yes, because title acquired through a tax sale is never considered marketable until a quiet title action has been completed.
No, because the buyer is protected by the government's authority to conduct the tax sale, which extinguishes all prior liens.
No, because the defect was in the notice to a lienholder, not the prior owner, so it does not affect the conveyance of the fee simple title.

Explanation: The correct answer is A. Marketable title is title free from reasonable doubt and the threat of litigation. A defect in a prior judicial or quasi-judicial proceeding, such as a tax foreclosure sale, can render title unmarketable. The failure to provide proper notice to a party with an interest in the property (like a lienholder) is a significant procedural defect that could allow that party to challenge and potentially overturn the sale. This creates an unacceptable risk of litigation for the buyer, making the title unmarketable. B is an overstatement; a properly conducted tax sale can produce marketable title. C is incorrect because the government's authority is contingent on following proper procedure; failure to do so undermines the validity of the sale. D is incorrect because a lienholder has a property interest protected by due process, and failure to provide notice to them can void the sale's effect on their lien, thus clouding the title.

Question 6

You are representing a client who is purchasing a commercial building. The purchase agreement requires the seller to deliver 'marketable and insurable title' at closing. Your client's title search reveals a restrictive covenant recorded 50 years ago that prohibits the sale of alcohol on the premises. Your client intends to operate a restaurant that serves wine and beer. The neighborhood is now zoned for commercial use, including restaurants with liquor licenses. The seller argues that the covenant is obsolete and likely unenforceable due to changed neighborhood conditions.

What is the best advice to give your client regarding the title? Select one.

The title is marketable because the zoning ordinance permitting alcohol sales supersedes the private restrictive covenant.
The title is marketable because the seller is correct that the covenant is likely unenforceable due to changed conditions.
The title is unmarketable because the presence of the restrictive covenant exposes the buyer to a significant risk of litigation, regardless of its likely enforceability. (correct answer)
The title is unmarketable only if the title insurance company refuses to issue a policy without an exception for the covenant.

Explanation: The correct answer is C. Marketable title is title reasonably free from the threat of litigation. A restrictive covenant that conflicts with the buyer's intended use of the property renders title unmarketable. Even if the seller believes the covenant is unenforceable due to changed conditions, this would have to be established in court. The mere existence of the covenant creates a cloud on the title and exposes the buyer to the risk of having to defend a lawsuit to have it declared unenforceable. This risk makes the title unmarketable. A is incorrect because zoning laws do not override private covenants; a landowner must comply with both. B is incorrect because the likelihood of unenforceability is not enough; the buyer is not required to 'buy a lawsuit.' D is incorrect because while the contract also requires insurable title, the marketability of title is an independent requirement. A title can be insurable but still unmarketable.

Question 7

What is the legal status of the seller's title? Select one.

The title is marketable because the lease is a month-to-month tenancy that can be terminated on short notice.
The title is marketable because the buyer's intention to continue renting the apartments means the lease is not an adverse encumbrance.
The title is unmarketable only if the tenant refuses to sign a new lease with the buyer after the closing.
The title is unmarketable because the existing lease is an encumbrance that was not provided for in the contract. (correct answer)

Question 8

A man and a woman owned a property as tenants by the entirety. The man entered into a valid contract to sell the property to a buyer. The contract was signed only by the man. The woman was aware of the contract but did not sign it. Before closing, the buyer's attorney reviewed the title and discovered the tenancy by the entirety.

The buyer now seeks to rescind the contract on the grounds that title is unmarketable. What is the most likely outcome? Select one.

The buyer will succeed, because one spouse cannot convey property held as tenants by the entirety without the other's joinder. (correct answer)
The buyer will succeed, but only if the woman affirmatively states she will not sign the deed at closing.
The buyer will not succeed, because the woman's awareness of the contract constitutes implied consent, which is sufficient to bind her.
The buyer will not succeed, because the seller has until the closing date to cure the defect by having his wife join in the deed.

Explanation: The correct answer is A. In a tenancy by the entirety, neither spouse can unilaterally convey or encumber the property. Any conveyance requires the signature of both spouses. Because the seller-husband alone signed the contract, he does not have the legal ability to convey the entire title as promised. Therefore, he cannot deliver marketable title. The buyer can rescind the contract based on this incurable title defect. B is incorrect because the buyer does not have to wait for an affirmative refusal; the title is unmarketable from the moment the contract is signed by only one spouse. C is incorrect because the Statute of Frauds requires a contract for the sale of land to be in writing and signed by the party to be charged; implied consent is insufficient. D is incorrect because this is not considered a curable defect in the same way as, for example, paying off a mortgage lien. The seller has contracted to do something he has no legal power to do alone, and he cannot compel his wife to sign. The buyer can rescind immediately.

Question 9

A buyer contracted to purchase a house from a seller in a jurisdiction with a race-notice recording statute. The contract required the seller to provide marketable title. Before closing, the buyer learned from a neighbor that the seller had previously entered into a contract to sell the same house to a third party. That prior contract was not recorded, and the closing for it has not yet occurred. The seller admits to the existence of the prior contract but insists it will not be performed.

The buyer wishes to terminate her contract, claiming the seller's title is unmarketable. Is the buyer's claim valid? Select one.

Yes, because the existence of a prior executory contract to sell the property creates a risk of litigation from the other purchaser. (correct answer)
Yes, because the prior contract creates an equitable interest in the property that clouds the seller's legal title.
No, because the prior contract was unrecorded, and as a subsequent bona fide purchaser, the buyer will have priority if she records first.
No, because the seller's assurance that the prior contract will not be performed is sufficient to clear the title defect before closing.

Explanation: The correct answer is A. Marketable title is title that is free from the reasonable probability of litigation. The existence of a prior, potentially valid contract to sell the same property, even if unrecorded, exposes the current buyer to the risk of a lawsuit for specific performance from the prior purchaser. The buyer is not required to accept this risk and 'buy a lawsuit.' Therefore, the title is unmarketable. B is also true, as the prior buyer has an equitable conversion interest, but A is the better answer as it focuses on the practical consequence—the risk of litigation—which is the core test of marketability. C is incorrect because even if the buyer might ultimately prevail under the recording statute, the need to litigate the issue to establish priority makes the title unmarketable. D is incorrect because the seller's mere assurance is not legally sufficient to remove the cloud on title created by the prior contract.

Question 10

What is the best advice to give your client regarding the title? Select one.

The title is marketable because the zoning ordinance permitting alcohol sales supersedes the private restrictive covenant.
The title is marketable because the seller is correct that the covenant is likely unenforceable due to changed conditions.
The title is unmarketable because the presence of the restrictive covenant exposes the buyer to a significant risk of litigation, regardless of its likely enforceability. (correct answer)
The title is unmarketable only if the title insurance company refuses to issue a policy without an exception for the covenant.

Question 11

What is the strongest basis for your client to claim the seller's title is unmarketable? Select one.

The zoning ordinance and the private covenant are in conflict, creating a legal uncertainty that must be resolved before closing.
The existence of the restrictive covenant frustrates the buyer's intended use of the property, creating a title defect. (correct answer)
The covenant is a government regulation that limits the use of the property, which is a per se violation of marketability.
The seller failed to disclose the existence of the covenant, which constitutes a fraudulent misrepresentation.

Question 12

You are representing a client purchasing a tract of land. The title abstract shows a complete chain of title ending with the current seller. However, the abstract also includes a copy of a deed recorded 20 years ago by a person who was not in the chain of title, purporting to convey the property to a third party. This deed, known as a 'wild deed,' has never been acted upon, and the seller and their predecessors have been in continuous possession of the land.

Does the presence of the wild deed in the public records render the seller's title unmarketable? Select one.

Yes, because any recorded instrument purporting to convey title, even if invalid, creates a cloud on title that must be removed. (correct answer)
Yes, because under a race-notice statute, the wild deed could potentially give the grantee priority over subsequent purchasers.
No, because a wild deed is a nullity and does not impact the valid chain of title, so it cannot be a defect.
No, because the seller's continuous possession of the land has extinguished any potential claim under the wild deed through adverse possession.

Explanation: The correct answer is A. Marketable title must be reasonably free from doubt and the threat of litigation. A wild deed, while technically a nullity and outside the chain of title, is a recorded instrument that facially clouds the owner's title. A prudent buyer would not accept a title with such an instrument on the record, as it could lead to future complications or litigation, even if the litigation is likely to be unsuccessful. The seller is typically required to undertake a quiet title action to have the wild deed formally expunged from the records to deliver marketable title. B is incorrect because a wild deed, being outside the chain of title, does not provide constructive notice to subsequent purchasers and thus cannot give its grantee priority. C is incorrect because while the deed is legally a nullity, its practical effect is to create a cloud that makes the title unmarketable. D is an overstatement; while the seller's possession strengthens their position, the buyer should not be required to rely on proving adverse possession against a potential claimant in the future.

Question 13

A woman died, leaving her house to her son and daughter 'as joint tenants with right of survivorship.' The daughter later sold her interest in the house to a buyer by executing and delivering a quitclaim deed, which the buyer recorded. The son was unaware of this transaction. The buyer has now entered into a contract to sell the entire house to a new purchaser. The contract requires the seller (the buyer) to deliver marketable title to the fee simple.

Is the seller's title marketable? Select one.

Yes, because the daughter's conveyance of her interest severed the joint tenancy and gave the buyer a half-interest in the property.
Yes, because the buyer's recording of the deed put the son on constructive notice of the transfer.
No, because the son did not consent to the original conveyance from the daughter to the buyer.
No, because the buyer owns only a one-half interest as a tenant in common and cannot convey the entire fee simple. (correct answer)

Explanation: The correct answer is D. The conveyance by the daughter (a joint tenant) of her interest to the buyer severed the joint tenancy. The buyer and the son now hold the property as tenants in common, each with a one-half undivided interest. The buyer (now the seller) contracted to sell the entire fee simple to the new purchaser, but he only owns a one-half interest. He cannot deliver marketable title to the entire property because he does not own it. A is a correct statement of the legal effect of the daughter's conveyance but leads to the wrong conclusion; owning a half-interest does not allow one to convey marketable title to the whole. B is irrelevant to the question of what interest the buyer owns. C is incorrect because a joint tenant is free to convey their interest without the consent of the other joint tenants.

Question 14

A developer purchased a large tract of land, subdividing it into 20 lots. He recorded a declaration of restrictive covenants for the subdivision, which included a provision that all disputes concerning the covenants must be resolved through mandatory arbitration. He then sold Lot 1 to a buyer. Later, the developer contracted to sell Lot 2 to a different buyer. This second contract required marketable title but was silent on the covenants and the arbitration clause.

The buyer of Lot 2 discovers the mandatory arbitration clause and claims the title is unmarketable. Is the buyer's claim correct? Select one.

Yes, because a mandatory arbitration clause is an unusual servitude on the land that increases the risk of litigation.
Yes, because the clause restricts the buyer's access to the courts, which is a significant impairment of property rights.
No, because the covenant applies uniformly to all lots in the subdivision and is therefore a valid land use regulation.
No, because the arbitration clause is a procedural rule, not an encumbrance that affects the title to the land itself. (correct answer)

Explanation: This question tests your understanding of marketable title and what constitutes an encumbrance that renders title unmarketable. When evaluating title marketability, you need to distinguish between restrictions that affect the land's use versus procedural mechanisms that don't impact the property itself. The correct answer is D because the mandatory arbitration clause is purely procedural—it dictates how disputes about the covenants must be resolved, but it doesn't restrict how the land can be used, developed, or transferred. The clause doesn't create any physical limitations on the property or affect the buyer's ownership rights in the land itself. It's simply a dispute resolution mechanism that operates separately from the title. Answer A is wrong because while arbitration clauses might be uncommon in some contexts, the mere fact that a servitude is "unusual" doesn't automatically make title unmarketable. The key is whether it materially affects the property's use or value. Answer B incorrectly assumes that limiting court access creates unmarketable title. However, parties can contractually agree to alternative dispute resolution methods, and this procedural limitation doesn't constitute a title defect. Answer C makes the right conclusion but for the wrong reason. The uniformity of application across all lots is irrelevant to marketability analysis. A restriction applied uniformly could still render title unmarketable if it materially impaired the property. Study tip: Remember that marketable title issues arise from encumbrances that affect the land's use, value, or transferability—not from procedural rules about how disputes are handled. Focus on whether the restriction impacts the property itself versus how legal matters are resolved.

Question 15

The buyer wishes to terminate her contract, claiming the seller's title is unmarketable. Is the buyer's claim valid? Select one.

Yes, because the existence of a prior executory contract to sell the property creates a risk of litigation from the other purchaser. (correct answer)
Yes, because the prior contract creates an equitable interest in the property that clouds the seller's legal title.
No, because the prior contract was unrecorded, and as a subsequent bona fide purchaser, the buyer will have priority if she records first.
No, because the seller's assurance that the prior contract will not be performed is sufficient to clear the title defect before closing.

Question 16

A buyer and seller executed a contract for the sale of a house. The title search revealed a racially restrictive covenant recorded in 1940, prohibiting the sale of the property to non-Caucasians. The buyer, who is not a member of a protected class, seeks to rescind the contract, arguing that the presence of this covenant in the chain of title renders it unmarketable.

Is the seller's title unmarketable due to the racial covenant? Select one.

Yes, because any restrictive covenant, regardless of its content, is an encumbrance that makes title unmarketable unless excepted in the contract.
No, because the covenant is void and unenforceable as a violation of the Fourteenth Amendment and the Fair Housing Act. (correct answer)
Yes, because the offensive nature of the covenant creates a cloud on title that a buyer should not be forced to accept.
No, because the buyer is not a member of the class the covenant sought to exclude and therefore lacks standing to object to it.

Explanation: When evaluating marketable title, you need to distinguish between encumbrances that actually affect the property's use and transfer versus those that are legally void and unenforceable. The key principle is that unenforceable restrictions don't render title unmarketable. The racial covenant here, recorded in 1940, violates both the Equal Protection Clause of the Fourteenth Amendment and federal fair housing laws. Courts have consistently held that racially restrictive covenants are void and unenforceable as violations of public policy. Since this covenant cannot be legally enforced against anyone, it doesn't create a meaningful encumbrance on the title. The seller can convey marketable title because no court would enforce this discriminatory restriction. Answer A is wrong because not all restrictive covenants make title unmarketable—only enforceable ones that actually restrict the buyer's use or future transfer of the property. Answer C incorrectly focuses on the covenant being "offensive" rather than the legal test of enforceability. While the covenant is morally reprehensible, marketable title doctrine looks at legal enforceability, not offensiveness. Answer D misunderstands standing principles—the buyer's membership in the restricted class is irrelevant to whether the covenant affects marketability, and buyers generally have standing to challenge title defects regardless of their personal characteristics. Remember this pattern: on title questions involving discriminatory restrictions, focus on enforceability rather than mere presence in the chain of title. Void restrictions don't impair marketability, even if they remain in the recorded documents.

Question 17

A buyer and seller entered a land sale contract for a property located in a city. Prior to closing, the buyer discovered that the house on the property was built 10 feet closer to the street than allowed by the city's currently effective setback ordinance, which was enacted five years after the house was built. The house has been in its current location for 40 years. The city has never taken any enforcement action.

The buyer claims the title is unmarketable due to the violation of the setback ordinance. Is the buyer's claim likely to succeed? Select one.

Yes, because any existing violation of a zoning ordinance renders title unmarketable.
Yes, because the city could decide to enforce the ordinance at any time, exposing the buyer to litigation.
No, because the house was built before the zoning ordinance was enacted, making it a legal nonconforming use. (correct answer)
No, because the mere existence of a zoning ordinance does not affect the marketability of title.

Explanation: The correct answer is C. While an existing violation of a zoning ordinance typically renders title unmarketable, this structure does not violate the ordinance because it was constructed before the ordinance was passed. Such uses are 'grandfathered in' and considered legal nonconforming uses. As such, there is no violation, and the city cannot bring an enforcement action. The title is therefore marketable. A is a correct statement of the general rule but misapplies it to these facts. B is incorrect because the city has no legal basis to enforce the ordinance against this pre-existing structure. D is also a correct statement of law but is less precise than C; the key issue here is not the mere existence of the ordinance, but the fact that the structure is a legal nonconforming use, which resolves the potential violation issue.

Question 18

A title search of a property under contract for sale reveals that a deed in the chain of title, recorded 40 years ago, was executed by a corporation. However, there is no recorded evidence, such as a corporate resolution, authorizing that long-ago sale. The corporation was dissolved 20 years ago. The current seller and his immediate predecessor have been in possession for a combined 30 years.

The buyer claims that the potential lack of corporate authority for the 40-year-old deed renders the current seller's title unmarketable. What is the seller's best defense against this claim? Select one.

The seller can obtain title insurance for the buyer, which will cure any defect in marketability.
The statute of limitations for challenging a corporate action has long since expired, removing any threat of litigation. (correct answer)
Ancient document rules create a presumption that the deed was properly authorized and executed.
The corporation's dissolution makes it impossible for any party to challenge the validity of the past conveyance.

Explanation: When you encounter title defects involving old corporate deeds, focus on whether there's any realistic threat of future challenge to the title. Marketable title requires that a reasonable buyer wouldn't face litigation risk, not that every historical formality was perfectly documented. The seller's strongest argument is that the statute of limitations for challenging corporate actions has expired (B). Most jurisdictions impose time limits on challenging corporate transactions, typically ranging from 2-7 years. After 40 years, any potential claim that the corporation lacked authority to convey the property is time-barred. Since no one can successfully challenge the deed's validity in court, there's no realistic litigation threat, making the title marketable despite the missing documentation. Choice (A) is incorrect because title insurance doesn't cure marketability defects—it only provides financial protection against covered losses. The title must be marketable at closing regardless of insurance. Choice (C) misapplies ancient document rules, which create presumptions about authenticity and proper execution of old documents, but don't specifically address corporate authority issues. The presumption might help but isn't as strong as the statute of limitations defense. Choice (D) is wrong because corporate dissolution doesn't automatically validate prior unauthorized acts—shareholders or creditors might still have standing to challenge transactions in some circumstances. Remember this pattern: when analyzing old title defects, always consider whether statutes of limitations have eliminated any realistic chance of successful challenge. Time-barred claims generally don't render title unmarketable, even if the underlying documentation is imperfect.

Question 19

A buyer contracted to purchase a farm from a seller. The property description in the sales contract refers to the property as 'the 100-acre Johnson Farm, as described in the deed recorded in Book 150, Page 32 of the County Records.' A subsequent survey revealed that the farm actually contains only 92 acres. The title search confirmed that the deed in Book 150, Page 32 correctly describes the boundaries of the 92-acre parcel the seller owns.

Can the buyer successfully claim that the seller's title is unmarketable? Select one.

Yes, because the seller contracted to convey 100 acres but can only deliver title to 92 acres.
Yes, because a significant discrepancy in acreage is a defect that clouds the title to the entire parcel.
No, because the reference to the recorded deed controls over the general statement of acreage.
No, because a shortage of acreage is a breach of contract issue, not a title marketability issue. (correct answer)

Explanation: The correct answer is D. This question tests the distinction between a defect in title and a breach of other contract terms. Marketable title relates to the quality of the seller's ownership and freedom from encumbrances and litigation risk. Here, the seller has perfect, marketable title to the 92 acres he owns. The problem is that he contracted to sell 100 acres. This is a breach of the contract's property description clause, for which the buyer may have remedies like specific performance with an abatement in price or rescission. However, it is not a title defect. The title to the land the seller does own is marketable. A and B are incorrect because they mischaracterize the issue as one of title marketability. C is incorrect because while the specific description might control in a deed interpretation dispute, it doesn't excuse the seller's breach of the sales contract, which promised 100 acres.

Question 20

The seller can obtain title insurance for the buyer, which will cure any defect in marketability.
The statute of limitations for challenging a corporate action has long since expired, removing any threat of litigation. (correct answer)
Ancient document rules create a presumption that the deed was properly authorized and executed.
The corporation's dissolution makes it impossible for any party to challenge the validity of the past conveyance.