Which statement is true regarding title defects?

Title defects are issues or problems associated with the ownership of a property that can impede the ability to legally transfer ownership or financing of that property. The statement that title defects must be resolved before property can be sold is accurate because any defect in the title could lead to disputes, legal challenges, or complications that could invalidate the sale or lead to financial loss for the buyer.

Ensuring that the title is clear is a critical component of real estate transactions. Buyers typically seek title insurance that protects against potential defects, and lenders also require clear title to secure their investment. Therefore, any title issues must be addressed—whether through correction, negotiation, or quieting the title—before the transaction can proceed.

Considering the other options, it’s not the case that litigation is the only method for resolving title defects, as many issues can be settled through negotiation or title insurance. Title defects can significantly impact real estate transactions, so asserting that they do not affect these processes is misleading. Additionally, title defects are relevant to all property types, including residential, commercial, and mixed-use properties. Thus, the importance of resolving title defects applies universally across the real estate market.