Encumbrance affecting marketability of title

• A. Party Wall Easement
• B. Encroachments
• C. Lis Pendens
• D. Tenancy in Common

Answer: (C)

The key concept is that title marketability is affected by encumbrances that directly cloud the title, signaling unresolved issues behind the scenes. A lis pendens is a recorded notice that a lawsuit involving the property or its title is pending. Because it is attached to the property record, it warns buyers and lenders that the title could be altered by the outcome of the litigation. This makes the title difficult to insure and transfer until the dispute is resolved or the lien is released, so marketability is immediately compromised.

Other options involve legitimate rights or issues that can exist with a property, but they don’t inherently cast a cloud on the title in the same way. A party wall easement is a recorded use right that the footprint of the property already accommodates. An encroachment is a physical intrusion that can be resolved or remedied, and while it can affect value, it doesn’t automatically indicate ongoing litigation. Tenancy in common describes ownership, not an encumbrance, unless specific disputes exist.