marketable title


Also found in: Financial, Wikipedia.

Marketable Title

Ownership and possession of real property that is readily transferable since it is free from valid claims by outside parties.

The concept of marketability of title refers to ownership of real estate. Under law, titles are evidence of ownership. Selling real estate (land and the property attached to it) involves transferring its title. A marketable title is one that can be transferred to a new owner without the likelihood that claims will be made on it by another party. The concept is crucial in all real estate transactions because buyers generally expect to receive property to which no one else can lay claim; they do not expect that their ownership will later be challenged. Marketability of title is addressed in the contract for sale. Unless a contract for sale specifies that a third party has claims on the real estate, there is an implied provision that the seller has a good or marketable title, which the buyer will receive.

However, some real estate that is for sale will have outside claims against it. These claims are known as clouds and encumbrances. For instance, the owner of the title may have outstanding debts or owe interest that has resulted in a lien being placed on the property. The lien gives the owner's creditor a qualified legal right to the property in question, which remains in effect until the debt is settled. Because liens are long-lived (they can remain in force across generations), many states have tried to simplify land transactions by adopting marketable title acts. Generally, these laws limit the duration of a lien to a period of years during which the lien holder must take some action to satisfy the lien, or it is extinguished. Typically these laws apply to liens in existence at the time of the law's creation, as well as to future liens.

Ordinarily, contracts for the sale of real estate provide a remedy for a buyer who later discovers that 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. 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. In this case Bob has failed to provide Mary with marketable title. He will soon be hearing from her attorney, who will say that Mary is rescinding and wants her money back.

Cross-references

Cloud on Title; Real Property; Title Insurance; Title Search.

marketable title

n. the title to real property which has no encumbrances (mortgage, deed of trust, lien, or claim) and which is free of any reasonable objection (excluding minor mistakes in the description or typographical errors). A court will enforce a contract to buy and sell real estate if there is marketable title. (See: real property, contract)

marketable title

in conveyancing in Scotland, an implied term of every contract for the sale of heritage that the seller will inter alia deliver a marketable title, which not only means that there will be no eviction but also that there will be no reasonable challenge that can be made.
References in periodicals archive ?
ConveyancePrep is available to support any servicer or institutional investor with assets in need of conveyance or marketable title assistance, and is included for free when utilized under the Trustee Sale Plus program.
Tenders are invited for invites sealed bids under 2 bid system from interested parties (who have clear marketable title and also holding commercial license) for letting out their premises (Ready to occupy/under construction) on Ground Floor for housing new branches At Bilagunda, (Kodagu Dist.
They have also shelved discussions over the name of the new superauthority - with the most internationally marketable title 'Greater Birmingham' proving unpalatable to leaders from the Black Country, Solihull and Coventry.
In the event that the property does not have a clear and marketable title, or there are issues connected to the approvals from the relevant authorities, normally banks or home finance companies keep the loan sanction letter valid till the customer finds another property which has clear title and approval," says Sachidanand.
The sale was almost in jeopardy due to the lender being unable to produce marketable title.
His publishers coined the name as a marketable title for the book, but it's disliked by many scientists.
Once a loan becomes a real estate-owned (REO) property, the servicer has six months to sell the property once marketable title is obtained.
It is relatively simple to satisfy the statutory requirements to file a notice of pendency, inviting potential abuse by parties seeking to restrict property owners' ability to convey marketable title.
Independent Legal Opinion--good and marketable title or ensure it was not otherwise illegally obtained.
RPPTL Chair Sandra Diamond told the board in December that the standards have been published since 1975 and are used for reference in the Florida Association of Realtors/Bar Contract for Sale and Purchase of property and are the standard for determining marketable title in Florida.
For example, it is usual to have a clause stating that if there is a defect in the legal title which would not enable the buyer's solicitor to certify to a mortgage lender that the property had good and marketable title, the buyer would have the option to withdraw from the Lock Out Agreement and the deposit would be refunded to him.