Which encumbrances may render a title unmarketable?

A title is considered unmarketable when there are title defects or encumbrances that would make a reasonable buyer reluctant to purchase the property. Mortgages are liens on the property that create a financial encumbrance, and they must be cleared from the title for it to be marketable. Significant encroachments, which occur when a physical structure, such as a building or fence, extends onto another person's property, also lead to potential disputes that can significantly affect the ownership and use of the property, hence making the title unmarketable.

In contrast, utility easements, while they represent a right for a utility company to access the property, are often considered a normal part of land use and typically do not make a title unmarketable. Restrictive covenants can impose certain limitations on property use, but they usually do not impact the marketability unless they are particularly burdensome. Minor repairs needed on the property and pest infestations, although they may affect livability or desirability, do not affect the formal title and thus do not render it unmarketable.