What is a marketable title in real estate?

Title that is free from reasonable doubt or any sort of threat of litigation. An implied promise in a contract when a seller is selling land to a buyer is that the seller will deliver marketable title to the buyer at the date of the closing.

What makes a marketable title?

A marketable title is a title that is free and clear of any defects or clouds that a reasonable buyer would find objectionable. This is a fairly stringent standard, but buyers should also be aware that a marketable title does not have to be a perfect title.

What is an example of a marketable title?

Suppose, for example, that Mary buys land from Bob. The contract of sale declares that Bob holds marketable title to the land. After paying Bob, Mary receives a letter from an attorney saying that a business called Lou’s Used Cars holds a lien on the property because Bob is using it as collateral for a car loan.

Can you sell unmarketable title?

Unmarketable title is the buyer’s bludgeon, not the seller’s. If the buyer wants the property anyway, then the seller must abide by the real estate sale contract and sell it to him.

What makes a property unmarketable?

A title to a piece of land is considered unmarketable if there are encumbrances on the land, such as mortgages, unless the buyer waives them. Title is also unmarketable if the land was obtained through adverse possession, or if the land violates any zoning laws.

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Does easement render title unmarketable?

An easement that reduces the value of the property renders title unmarketable.

What is the best evidence of marketable title?

The best evidence of marketable title is a lender`s or owner`s title insurance policy. But when a title insurance company is willing to insure the title, the buyer or lender feels confident the title is marketable.

What happens if the title is not marketable?

If the seller has failed to provide marketable title, the buyer is permitted to rescind the sale—that is, to back out of the contract and receive a refund of the money paid for the property. Suppose, for example, that Mary buys land from Bob. The contract of sale declares that Bob holds marketable title to the land.

What is the difference between marketable title and insurable title?

Marketable title is free of encumbrances and defects and is reasonably believed to be valid. … Insurable title is most often described as when a known defect exists but a title insurance company is willing to insure over the title issue at normal market rates.

Do easements affect marketability?

In most situations, easements will not decrease the value of the property. If the easement has strict rules or requirements the property owner must follow, however, it can affect property value and marketability. The more you know about the easements on a property, the more informed you’ll be as a buyer.

Does lack of access make title unmarketable?

In support of its unmarketability argument, Woody Creek equates the lack of permanent access to a complete lack of access and cites a legal treatise for the proposition that “[t]he majority rule is that lack of access makes title unmarketable.” Aplt. Br. 37-38.

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