Marketable title does not mean perfect title — it means title that a reasonable, well-informed buyer would accept. Minor issues that do not affect the value or use of the property, such as existing zoning restrictions or visible utility easements, generally do not make title unmarketable. However, outstanding liens, boundary disputes, breaks in the chain of title, or competing claims of ownership make title unmarketable.
A buyer enters into a purchase contract that requires the seller to provide marketable title. The title search reveals an unpaid judgment lien against the seller. Because this lien makes the title unmarketable, the seller must pay off the judgment before closing, or the buyer can cancel the contract.
Marketable title does NOT mean title free of ALL encumbrances — standard easements and zoning do not make title unmarketable. A common exam trick is presenting a scenario with a utility easement and asking if title is unmarketable — it usually is still marketable. Insurable title is different from marketable title — title can be insurable but not marketable.
Related Terms
Related Concepts
A deed is a written legal document that conveys (transfers) ownership of real property from one party to another. It must be delivered to and accepted by the grantee to be effective.
A general warranty deed provides the greatest protection to the grantee by guaranteeing that the grantor holds clear title and has the right to sell the property. It includes covenants that protect against all defects in title, even those arising before the grantor owned the property.
A special warranty deed guarantees that the grantor has not caused any title defects during their period of ownership, but does not warrant against defects that existed before the grantor acquired the property.
A quitclaim deed transfers whatever interest the grantor may have in a property without making any warranties or guarantees about the quality of title. It offers the least protection to the grantee.
A bargain and sale deed implies that the grantor holds title and possession of the property but does not include warranties against encumbrances or title defects.
Frequently Asked Questions
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